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Jun

VAT: Golf Green Fees Update PUBLISHED IN VAT

I have now read the text of the Bridport Golf Club case (TC01214), and discussed it with others, allowing me to add to my last blog on this subject.

 Much as I had predicted, HMRC stood hard on one particular argument, which the tribunal felt was unsustainable. This was that services provided to non-members must, ipso facto, be mere money raising ventures directly competing with proprietorial clubs, and thus obviously different to the services supplied to members. It did not matter, they argued, that there was no practical difference in the service. We might also surmise that it did not matter that the service went on at the same time as the members’ service (indeed, often within the same round of golf). This, the tribunal could not accept. The difference in the status of the player was incidental in its view. The club planned specifically to attract visitor custom and it was not a kind of extra bonus within the business model.

 
The tribunal also considered whether restriction of exemption was an implicit attempt to introduce a restriction allowed to member states under the EU rules, namely that exempt clubs should not distort competition as regards proprietorial clubs. If that was the intention, the tribunal could not see how it achieved that end. There were, it pointedly stated, enough grounds to allege “distortion of competition” in respect of the supplies made to the members. It hardly made a difference to that state of affairs if a further tax break were given to services to the minority class of non-members.  In any case, a qualifying non-members club had no such restriction, so there was no evidence of a concerted effort to address distortion of competition in the legislation.
 
Finally, the additional provision in the EU VAT Directive, that the exemption must not cover supplies that were entered into merely to generate funds for other activities and were in competition (though not necessarily distortive competition) with commercial operators, did not seem to apply to these non-member charges at least. The price was proportionate and the constitutional purposes of the club included the admission of “visitors” to play golf. So the very supply was a central purpose of the club.
 
However, the judge tried (in a sketchy sort of way) to give an example of where HMRC’s objection might succeed, such as if a course was let out lock stock and barrel for occasional private hire. Now, this raises a number of issues. Does this stop a club arguing that lettings to commercial bodies of the facilities at as high a price as is achievable (assuming the members will clear out of the way) are exempt? For example, this could affect a corporate entertaining package. 
 
Looking more broadly, what does it say about other non-profit bodies that allow other parties to use sports facilities for the same reason, namely to contribute towards the body’s general costs? This is still potentially a minefield, and one where obtaining a hard and fast “black line” for organisations is going to be difficult.
 
Where next for HMRC? They might appeal, and might try to get it referred to the ECJ. They probably need to consider a complete overhaul of the UK legislation in this area. The Directive gives them options. Even if they pursue an appeal, they ought to be considering “Plan B”.
 
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