A number of private members’ golf clubs have expressed disappointment that HMRC has so far not processed claims for a VAT rebate on green fees following an historic European Union ruling last year.
HMRC has asked the tax tribunal that all appeals that stood behind the original case involving Bridport and West Dorset Golf Club be put on hold until July 18 to give it time to decide whether it will argue that clubs can not receive payments as a process called unjust enrichment may occur.
The development comes as KPMG, the accountancy firm that represented Bridport and West Dorset Golf Club in its litigation and is representing hundreds of private members’ golf clubs in their action against HMRC, has recommended that golf clubs treat green fees as being VAT exempt from the start of the current VAT return period.
Last year the European Union ruled that green fees at private members’ golf clubs must be exempt from VAT, which has meant that hundreds of clubs are hoping to claim back millions of pounds from the government. This ruling has also frustrated proprietary golf clubs, as the decision does not apply to them.
Over 1,000 private members’ golf clubs, representing more than two-thirds of all the private members’ golf clubs in the UK, have issued a claim to HMRC since the ruling.
At the end of April HMRC made its application for the process to be put on hold.
“We are discussing this with HMRC and have voiced our concerns at the length of delay,” said Paul Stewart, director of Indirect Tax at KPMG.
“We expect to have further contact with HMRC in early June about this and will have an update then.
“Regarding unjust enrichment, HMRC would need to show that a golf club’s pricing structure passed the economic burden of the VAT on to customers,” he said. “We expect clubs to continue to charge the same price for their green fees, which supports our view that fees are generally set by reference to the market regardless of the VAT liability, making the unjust enrichment argument difficult for HMRC to pursue.
“We have recommended to our private members’ golf club clients that they treat any green fees received as exempt with effect from the start of the current VAT return period.”
Several golf club managers have contacted Golf Club Management to express anger at what they perceive to be ‘delaying tactics’ by HMRC. They have all asked to be anonymous.
“There must be some serious concerns as to the validity of the unjust enrichment defence if HMRC need more than two months to consider and be advised on it,” said one.
His argument echoes the comments of VAT expert Adrian Houstoun, who has also been critical of HMRC.
“When HMRC won their argument earlier in the legal process, they issued a brief denying favourable VAT treatment roughly three weeks later; however, they have not yet issued a new brief,” he said.
“Further, most businesses without professional representation would commence their enquiries about the VAT status of their transactions by consulting HMRC, which still states on its website that visitor green fees are standard rated!”
HMRC’s position is in contrast to the Irish government’s.
This January the Revenue Commissioners in Ireland said it ‘accepts’ the EU ruling, is amending legislation and will make refunds to golf clubs subject to consideration of unjust enrichment, which includes the extent to which the overpaid amount was for practical purposes passed on to visitors in the price charged.
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