AGCO meets with top treasury official

Three campaigners for a reformed tax regime in British golf have met with a senior treasury official to discuss the way forward.

Vivien Saunders, chair of the Association of Golf Course Owners (AGCO), Andrew Sutcliffe, vice chairman of AGCO and Jeremy Sturgess, owner of Trent Park Golf Club, discussed tax in golf with David Gauke MP, exchequer secretary to the treasury.

AGCO has been campaigning for its members, owners of proprietary golf clubs, to be subject to the same taxation regulations as private members’ golf clubs, which can charge reduced VAT on membership subscriptions.

Treasury officials reviewed a report that AGCO produced, Fair Tax in Sport, which detailed the issue.

“The VAT distortion has crippled many proprietary clubs for 20 years,” said Saunders.

“I flagged up the absurdity of member-owned clubs, with their huge trading activities, being classified as non-profit making. We also made the point that these clubs are failing to pay corporation tax on their trading income, because they hide it under ‘temporary memberships’. The Fair Tax in Sport report also raised the issue of the nonsense of clubs registering as Community Amateur Sports Clubs [CASC], which saves members’ clubs £30,000 or so a year in business rates.

“We repeatedly made the point that something must be done urgently or other good proprietary clubs will go the way of The Norfolk – a fantastic golf venue returned to farmland.”

This is the latest meeting that AGCO has had with a senior MP this year – representatives have met several law makers in the last few months, including foreign secretary William Hague and former defence secretary Dr Liam Fox.

The meeting comes just five weeks after Vivien Saunders’ attendance at the tax tribunal first tier case between Chipping Sodbury Golf Club and Her Majesty’s Revenue and Customs (HMRC), which could reduce the VAT all sports’ clubs pay on their members’ subscriptions.

Keith Lloyd, chief executive of the Golf Club Managers’ Association (GCMA), who also attended the hearing, explained the importance of that case.

“It is the lead case where Chipping Sodbury, the appellant, is seeking a claim for overpaid VAT on membership subscriptions paid between 1973 and 1989,” he said.

“The claim is made on the basis of apportionment, that is that a member’s golf subscription represents a ‘bundle’ of services of which some are exempt from incurring VAT, and some are deemed outside the scope.

“It is believed that as many as 1,200 other UK golf clubs may have submitted similar claims, in addition to which a further 500 non-golfing but equally non-profit making sporting bodies have similar claims dependant on the outcome of this case.

“The scale of importance of this case is therefore enormous, as should this case be found to be in favour of the appellant, claims for the 1,700 cases ‘stacked’ behind the outcome would also be valid. With interest automatically being an entitlement in addition to the actual claims, estimates for the cumulative refund total vary from £150 million to possibly as much as £400 million.

“Costs for this hearing were well in excess of £70,000 of which a significant percentage had been funded by a sterling effort on the part of Vivien Saunders to raise contributions from clubs and individuals or associations from the proprietary sector. It is worth reminding all concerned that in getting the case thus far, England Golf also underwrote £100,000 of support for previous legal costs, not to mention, of course, previous various contributions from the many individual clubs with vested interests in the case.”

Vivien Saunders also reflected on the hearing.

“The case should establish that there is distortion, but whether the judges will go so far as to say the distortion is illegal is another matter,” she said.

“It may result in the return of some VAT and for members’ clubs even going back to 1977. The main issue, we believe, for the treasury is that they are probably anticipating losing the Bridport and West Dorset Golf Club case [which is due to be decided later this month]. That would result in member-owned clubs clawing back some £300 million in VAT on green fees going back to 1990 and being VAT exempt for green fees in the future.

“I had a very interesting email from a proprietary golf club owner, who is a professional golfer, who recovered VAT on his golf teaching. But HMRC then set on him and demanded to re-open his accounts and recovered income tax based on the fact that his earnings had increased because of the return of the VAT.

“Our hope, quite frankly, is that if the member-owned clubs claw back VAT on green fees from 1990, then HMRC re-opens their accounts and looks at the corporation tax on those green fees! Corporation tax is payable on visitors’ fees, as opposed to members’ guests. Funnily enough we can only find one English club paying corporation tax on those green fees – Bridport and West Dorset! That issue was also on our agenda with the treasury.”