VAT liability of green fees
HMRC has issued a new business brief concerning a long running case concerning the VAT liability of green fees charged for visitors at non-profit making golf clubs. The golf club in question had historically accounted for VAT on its green fee income in accordance with the treatment outlined in UK law and HMRC’s guidance on the matter.
Following an analysis of case law, a golf club submitted a voluntary disclosure in 2009 seeking the repayment of a significant amount of output tax on the basis that the green fee’s income was VAT exempt and that VAT had been accounted for in error. HMRC rejected the voluntary disclosure and the issue was heard by the Tribunal earlier this year. The Tribunal ultimately found in favour of the taxpayer finding that the UK law limiting the VAT exemption only to members of the golf club was ultra vires.
HMRC believed that the First-tier Tribunal has erred in interpreting EU law and remained of the view that where clubs that run membership schemes make charges to non-members for the use of certain sporting facilities, such as green fees, the charges are standard rated. HMRC sought permission to appeal to the Upper-tier Tribunal and the Tribunal Chairman decided that in view of the importance of the issue for the Community in general and the number of cases that are affected by the decision the issue would be referred to the ECJ.
The ECJ upheld the decision and HMRC now accepts that supplies of sporting services to both members and non-members of non-profit making sports clubs qualify to be treated as exempt from VAT. This is provided that the services are closely linked and essential to sport and are made to persons taking part in sport. HMRC will legislate by 1 January 2015 to reflect this.
HMRC has also issued an update on the treatment of new and existing claims and the implications of receiving repayments of overpaid output tax.