HMRC has issued a brief guide outlining its VAT policy on non-members' green fees following the Bridport & West Dorset Golf Club ruling last December.
During the case, the Court of Justice of the European Union (CJEU) ruled that golf clubs did not have to pay VAT on green fees collected from non-members.
In May, the Revenue applied to the upper tribunal to put golf club VAT rebates on hold until 18 July until it decides whether to argue unjust enrichment.
The new brief explains HMRC’s interpretation of the Bridport judgement and its approach to repayment claims.
The Revenue accepted that supplies of sporting services to members and non-members of non-profit sports clubs qualify for a VAT exemption, provided services are “closely linked and essential to sport”.
It plans to legislate on this point before January 2015.
HMRC also set out what golf clubs should do to claims overpaid VAT for both existing and new claims.
There are two phases: clubs that want to reimburse non-members incorrectly charged VAT; and clubs that don’t adopt reimbursement arrangements.
For the first phase, where a members’ golf club or other non-profit making sports club thinks it has overpaid VAT on sports related services, it can make a claim for a repayment under the VAT Act 1994.
But the club will need to demonstrate it has made arrangements to repay the VAT to the people who originally paid it. Clubs willl also need to make a legally binding commitment to do so in a ‘timely manner’.
Clubs reimbursing non-members will have to make sure the claim is adjusted to reflect any over-claim of input tax by application of their partial exemption and/or capital goods scheme calculations before proceeding.
All Phase 1 claims should be sent to:
VAT Bridport Claims S0483
PO Box 200
The treatment of Phase 2 claims are currently being examined by HMRC.
For existing claims, clubs can now resubmit rejected claims that have not been appealed as a new claim. If they have been appealed, they are considered to be still open.
Claims can be amended but only if it’s for claiming additional amounts in respect of non-members that were either overlooked or the result of calculation errors for accounting periods in the original claim.
If the claimant wishes to claim for something else a new claim will need to be submitted.
All new claims will be subject to the four-year time limit in section 80(4) of the VAT Act 1994.
In addition to this guidance, HMRC said where amounts of overpaid output tax are repaid and not re-imbursed to affected customers, there may be direct tax implications.
For example, trading income from non-members is taxable and therefore any surplus of non-member income that remains after the deduction of relevant expenses is liable to corporation tax.