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Is Tee Sponsorship a Standard Rated Supply

HMRC guidance at odds with the majority of clubs

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After the Bridport case determined that golfing activities on the course by individuals were exempt many clubs continued to claim a proportion of the input VAT on course expenses where they had tee advertising, buggy hire and Corporate golf days which have been considered to be standard rated. At the Bridport Tribunal it was stated that buggy hire or tee advertising income, both of which are standard rated, this were sufficient for VAT on course maintenance costs to continue to be treated as ‘residual’ and eligible for partial recovery calculated by reference to a partial exemption method.

However 6 months later in May 2016 HMRC issued guidance in Information Sheet 01/15 which states "Letting of space to permanently attach an advertising billboard or hoarding is a VAT exempt supply unless a valid option to tax has been exercised on the property."

Does anyone have any experience or opinion on whether an advertisement on a permanent structure placed at a tee (whether it is painted, stuck on or a metal plate screwed on) would be considered to fall into HMRC's interpretation of an exempt supply and ultimately lead to a smaller percentage of input VAT being able to be recovered on course expenses.

I have asked many people and the impression I get is that most are still treating the tee advertising/sponsorship as standard rated which allows a larger percentage of course input VAT to be recovered. Is anyone aware of HMRC's position or of the outcome of any decision on this following a visit?

Replies (4)

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Hallerud at Easter
11th May 2017 18:36

Who owns the structure to which the advert attached, is it a licence to use the land to place the structure which appears to be why 742 might apply (right over land)?

Not something I have dealt with but cannot see why else the supply would be exempt.

Thanks (1)
Replying to DJKL:
By Mallock
12th May 2017 08:58

I would say that the club owns the structure since they are normally fixed pretty permanently to the ground. If you don't play golf, these things are normally about 3 or 4 feet high and maybe 4 or 5 feet wide, made of hardwood with a post at either end and one or two flat sections between the posts. The flat sections will normally carry the hole number and perhaps an aerial view of the hole and underneath that details of the sponsor.

If a sponsor changes or ends their involvement, their name will merely be replaced or removed, the structure might get a quick rub down and varnish but it certainly won't be removed and replaced unless it is at the end of its life.

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By DMGbus
12th May 2017 08:49

If the advertiser owns the board then I can see justification that there is a supply of land which (absent of an option to tax) is VAT exempt. My reasoning is that the advertiser is paying for the right to place their property (the advertising board) on land / occupy a minute area of land.

On the other hand I see a different case applying where the advertising board is owned by the land owner. The advertiser is having their information / publicity displayed on the board owned by the land owner - I see no supply of land in this case - no land is occupied by the advertiser (I do not regard writing on a vertical surface to be occupying land).

I see from
that billboard advertising is subject to VAT
(eie. " That’s why it costs £727 +VAT per week to rent a 96-sheet billboard "

So Tee advertising is, in my view, the provision of advertising services rather than the supply of land - unless, as I originally stated, the advertiser provides the board

Thanks (1)
By jseddon92
26th Jun 2017 15:23

Yeah, the pricing for billboards is always subject to VAT from UK suppliers. There's a specific breakdown of the supplier costs including VAT on this post

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