SPORTING EXEMPTION - Golf Club Industry

Case Title: Chipping Sodbury Golf Club v. Commissioners for Her Majesty’s Revenue and Customs


Golf Clubs around the country will be aware of the current turmoil caused by the current and past application of VAT on their income, and some have recently submitted repayment claims which are now the subject of appeal.

As most clubs will know, the areas of most concern revolve around:

• HM Revenue & Customs' (HMRC) attempts to restrict retrospective claims for overpaid VAT to a period of three years
• HMRC's refusal to allow membership subscriptions to be apportioned, even though the Automobile Association case clearly identified that membership involved a bundle of supplies which are perfectly calable of being seperated into non-standard rated items and those liable to standard rate
• The distortion of competition that is created by the application of exemption to the membership subscriptions of the ‘not for profit’ members clubs, whilst HMRC continue to require the membership subscriptions of proprietary clubs to still be liable to VAT at the standard rate

The aim is that through a combination of appeals through the Tax Tribunal system and political lobbying, the law will be changed so that in future all Clubs will pay reduced rate VAT.

Benefits of a reduced Rate of VAT

For the ‘not for profit’ members clubs this would mean less complicated VAT returns and accounting, with no restriction on input VAT claims. If green fees are also held to be exempt, then most of the clubs input tax will be become irrecoverable, and therefore the low rate VAT will become beneficial to all Clubs. The low rate on the membership and green fees will be less than the input tax on purchases, and therefore they will receive repayment each quarter.

For the proprietary clubs the primary benefit would be the creation of equality of treatment between the proprietary and not for profit clubs.