Clubs may soon be able to claim back green fees VAT

Golf clubs in the UK may soon be able to claim back VAT payments on green fees, dating back over four years, following a ruling by the European Court of Justice (ECJ).

However, clubs should bear in mind that pursuing a back-dated claim could leave them owing more VAT to HMRC overall.

In a lead appeal case brought by Bridport & West Dorset Golf Club, the ECJ ruled that, as a not-for-profit, member-owned organisation, the club should not be required to account for VAT on green fees – the costs for visitors or non-members to play the course.

In effect, the ECJ’s decision, which is subject to a further hearing in the Upper Tribunal so is not yet set in stone, could mean that green fees charged to non-members become VAT exempt supplies.

Currently, only fees paid by golf club members are VAT exempt supplies but this ruling could require HMRC to amend legislation to include an exemption for non-member or visitor fees too.

If HMRC proceeds as expected, it will, following the Upper Tribunal decision, invite affected golf clubs (and other organisations) to submit claims for VAT overpayments on green fees dating back a maximum of four years.

Those clubs that have not already submitted protective claims are urged to do so in advance of HMRC’s Revenue Brief as claims are capped to a period of four years from the date of the claim.

Whilst it would seem like a good idea for clubs to lodge a claim straight away, tax specialists are warning that in some cases it could end up costing them more.

Steve Simmonds (pictured), Director of VAT Services at Birmingham-based accountancy firm, Clement Keys, explains: “Under current rules member-owned, not-for-profit golf clubs are entitled to claim back a percentage of the VAT incurred on any course improvements – such as when a course is redesigned or general improvements are made.

“What many clubs need to understand before submitting a back-dated claim for VAT paid in respect of green fees is that they could be left with a bill for the VAT previously recovered under the partial exemption rules which applied to payments for course improvements.

“Where the cost of carrying out course improvements is in excess of the green fee income over the last four years, the recovery of overpaid VAT on green fees could actually make the club financially worse off.”

Simmonds added: “There is an opportunity here for some clubs, but they need to act with care. They should start by calculating how much VAT they have recovered on payments for course improvements over the past four years and compare this with the potential value of any overpayment of VAT on green fees over the same period.

“It is only where the VAT recoverable on green fees exceeds the VAT recovered on courses costs should a back-dated claim should be considered.”