HMRC stalls on golf club VAT ruling

HMRC has applied to the upper tribunal to put an appeal for golf club VAT rebates on hold until 18 July, until it decides whether to argue unjust enrichment.

An HMRC spokesperson told AccountingWEB: “HMRC is still considering the decision carefully. We are looking to resolve the position as soon as possible.”

This means HMRC would need to know if golf clubs’ pricing structures passed the economic burden of VAT onto its customers.

The appeal is on the back of the ECJ decision in December last year, when it was ruled that Bridport & West Dorset golf club did not...

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Comments

Typical HMRC - why do we cop-operate with these shysters?    1 thanks

Trethi Teg | | Permalink

Here we go again.

Taxpayer owes HMRC money - bailiffs, court proceedings, liquidation etc.

HMRC owes taxpayer money - hard luck, you have to wait at our pleasure.

I really do not understand why we accountants co-operate in any way with these people. A withdrawal of co-operation will bring them to their knees and hopefully their senses.

I am sure that the apologists for HMRC and those who regard such proposals contrary to their standing as "professionals" will be responding in force.

 

 

 

 

The VAT Doctor's picture

Opportunists unite

The VAT Doctor | | Permalink

I am by no means an apologist for HMRC having built a career around defeating them, but this whole golf club issue is a bit odd.  It does seem to me in any situation where a taxpayer charges a fee without any explicit reference to VAT, HMRC are entitled to consider whether the taxpayer is out of pocket or is it is his customer?  Surely if you have turned up at a club on a regular basis and paid over your fee, you are entitled to ask the club for a refund where you have paid too much?  That said, HMRC need to get on with this as the onus is on them to prove unjust enrichment.

 

Physician heal thyself!

aidan.sergent | | Permalink

I disagree with the VAT Doctor. Surely there is no question of unjust enrichment as practically everyone who plays golf would be unable to claim recovery of VAT charged on a green fee. Anyone paying a green fee knows that is the cost of the round.  If you want it cheaper you go to a different golf club! 

The VAT Doctor's picture

Different point

The VAT Doctor | | Permalink

Whether someone can claim back VAT is not particularly relevant to the question of who has suffered the burden of tax.  If anything, this complicates the position but does not particularly impact on unjust enrichment - example - refunds claimed by hotels on no-show fees, where the original charge may well have had VAT recovered on it.  The hotels got the refund.

HMRC have, I understand, quite recently put up the drawbridge, so to speak, on trade waste claims, where again the VAT was passed on and recovered.  But they did make some payments before they changed their approach.

What I was saying was not that HMRC are correct, but that its a complex issue and it is by no means certain that any VAT refund can be retained and that HMRC should get on with it.

 

 

 

stepurhan's picture

What relevance recovery?

stepurhan | | Permalink

aidan.sergent wrote:
I disagree with the VAT Doctor. Surely there is no question of unjust enrichment as practically everyone who plays golf would be unable to claim recovery of VAT charged on a green fee.
What point are you trying to make here?

For the sake of argument, say that the green fee was £24 a time. Of this the golf club got £20. If green fees had not been subject to VAT then, with that being the only change, every player would have paid £20 a time to them, not £24. Whether people were happy paying £24, not caring that £4 of it was VAT, is irrelevant. The fact is that every one of those players is £4 a time worse off than they would have been if VAT had never been charged. I don't know about you, but I find having less money than I should something I have an interest in without even thinking about VAT.

The problem with the unjust enrichment rule is that, unless all these original players can be contacted, someone is going to end up being unjustly enriched. If the money is not paid back to the clubs, HMRC are the ones unjustly enriched. At least the clubs themselves would have some chance of being able to find some of the people affected. Why should HMRC get to keep the money instead?

julian.sims's picture

Delay!

julian.sims | | Permalink

Forgot I commented on this one, but sad to see I was right about the delay to consider unjust enrichment arguments!

 

DMGbus's picture

Chocolate teacakes

DMGbus | | Permalink

When it comes to the "unjust enrichment" issue the case that comes to mind is one that involved chocolate teacakes.

If a VAT inclusive price for playing golf by visitors / non-members was established and priced based on market conditions (ie. supply / demand / competition) then the VAT that was "overpaid" can be recovered as the VAT was a cost incurred to the golf club.

 

Time HMRC accept the inevitable and cave in

Briar | | Permalink

HMRC have raised the issue of unjust enrichment in desperation in the hope that they can delay the inevitable. They have now had 5 months December to come a decision. Why so long?

The golf clubs have joined together to fight the Bridport case and hired VAT experts to fight their case. They will win. Just as in the Arctic Systems case, HMRC will lose and, just as they did then, are now trying to come up with some weird and wonderful argument to support their case.

I particularly like Stepurhan's comment as to why HMRC should be unjustly enriched!

The ECJ decision applies to golf clubs owned by their members which are non-profit making and where, in many cases, in the event of a liquidation, surplus funds would be transferred to another golf club, golf association or sporting organisation. No individual would be unjustly enriched.

Come on HMRC! Admit you are wrong and pay up what you have wrongly collected (and sooner rather than later!!)

Is there enrichment and is it unjust?

odysseyats | | Permalink

I am not a VAT expert so I might have misinterpreted what unjust enrichment actually means.  But if you give the words their normal meaning I don't think there is either enrichment or any injustice in the first place. 

Using Stepurhan's example, the golf clubs' argument is that the green fee would have been £24 irrespective of the VAT treatment.  Looking at it from the punter's view, in evaluating whether to play at this golf club, you don't take into account whether this is costing you £20 plus VAT or simply £24. In fact most people don't know or care whether the green fee includes VAT or not.  Since this ECJ decision golf cubs are not as far as I know reducing their green fees by 1/6th, thus supporting the view that the price is the price irrespective of VAT.  Golf clubs haven't actually charged VAT to the customer, rather they have just accounted for it to HMRC (wrongly, we now know).

It is therefore arguable that the golf clubs' economic position would have been reinstated - as opposed to them having been enriched - by these refunds.  Even if they were enriched it would not have been unjustly so, because the VAT portion always economically belonged to the clubs anyway (and not the punter). 

In practice I seriously doubt that golf cubs are going to attempt to track down people with a view to paying them back VAT, although if a person approaches the club with evidence of payment and timing, then I would imagine the VAT would be refunded.  Remember some of these claims go back 20 plus years!

 

carnmores's picture

Fore!

carnmores | | Permalink

its all a load of balls , golf balls....  I subscribe to the theory that this is entirely the fault of HMRC, anyway who is being unjustly enriched apart from HMRC, the club members? I doubt that they will see any decrease in their annual subs 

what is the cost to play?

aidan.sergent | | Permalink

The point I was making earlier is that a golfer pays a green fee. End of story. It is not £20 plus VAT. It is £24. There is no-one losing in this scenario. If the fee is too high, you go to a cheaper venue. Whether golf clubs subsequently reduced their prices or not, the club no longer had a VAT liability and could benefit from an increase in profitability. This is enrichment, by definition. To those who paid a fee which at the time they paid it included an element of VAT, is there unjust depletion of their resources? No. There is depletion, but by consenting parties complying with the law of the moment. In neither case is the benefit or cost "unjust". QED I hope!