What should sports clubs do now, following HMRC’s latest guidance?
‘Our golf club has been told that it does not need to account for VAT on non-member fees to play golf and that a claim can be made for VAT overpaid on these fees. Is this the case and how can a claim be made?’
At the end of April 2016, I responded to the above question (see ‘Ask an expert’, Tax Journal, 29 April 2016), but at the point of going to print, HMRC had still not issued a Revenue & Customs Brief following the First-tier Tribunal’s judgment in West Berkshire Golf Club and others v HMRC [2015] UKFTT 627, which was on the subject of unjust enrichment.
The decision in the Berkshire GC case was that clubs may be unjustly enriched by receiving the overpaid VAT, but not to the extent that HMRC had initially claimed. The tribunal considered that the restriction on claims should be 10% of the VAT overpaid, not the 33% or 50% that HMRC had calculated.
HMRC has now issued Brief 10/2016, which accepts the tribunal’s judgment that 90% of any claim will be repaid. This is on the condition that claims do not include VAT on corporate days or on wholesale supplies to tour operators; and that the claims have been correctly adjusted for any revised partial exemption and capital goods scheme positions following the exemption of the non-member fees to participate in sport.
What should clubs do now?
Clubs should exempt all fees charged to playing members and non-members from 1 January 2015. In addition, the VAT previously paid to HMRC on non-member fees, where those non-members have participated in sport, should be reviewed to see if a claim can be made for the previous three or four years (three years if the membership fees have been exempted from 1 January 2015 and four years if not).
This will involve the reworking of the partial exemption and capital goods scheme calculations to reflect the change of VAT treatment. This may not yield a repayment if the club has undertaken substantial capital expenditure on the playing areas of the club (e.g. pitches), but all may not be lost if fees have been charged and non-exempt supplies are made at the same time, e.g. buggy hire for golf clubs and programme charges for tournaments.
Even if a three or four year claim is not viable, the position from 1 January 2015 will need to be reviewed. It is quite possible that sports clubs will be targeted by HMRC in the future to ensure that the correct treatment has been applied from 1 January 2015.
Finally, the position relating to wholesale supplies of tee times to tour operators is likely to be challenged in the tribunal at some future point. We understand that some of the larger golf clubs have lodged appeals against the FTT’s decision in the Berkshire GC case that the sale of tee times to tour operators should be liable to VAT at the standard rate.
What should sports clubs do now, following HMRC’s latest guidance?
‘Our golf club has been told that it does not need to account for VAT on non-member fees to play golf and that a claim can be made for VAT overpaid on these fees. Is this the case and how can a claim be made?’
At the end of April 2016, I responded to the above question (see ‘Ask an expert’, Tax Journal, 29 April 2016), but at the point of going to print, HMRC had still not issued a Revenue & Customs Brief following the First-tier Tribunal’s judgment in West Berkshire Golf Club and others v HMRC [2015] UKFTT 627, which was on the subject of unjust enrichment.
The decision in the Berkshire GC case was that clubs may be unjustly enriched by receiving the overpaid VAT, but not to the extent that HMRC had initially claimed. The tribunal considered that the restriction on claims should be 10% of the VAT overpaid, not the 33% or 50% that HMRC had calculated.
HMRC has now issued Brief 10/2016, which accepts the tribunal’s judgment that 90% of any claim will be repaid. This is on the condition that claims do not include VAT on corporate days or on wholesale supplies to tour operators; and that the claims have been correctly adjusted for any revised partial exemption and capital goods scheme positions following the exemption of the non-member fees to participate in sport.
What should clubs do now?
Clubs should exempt all fees charged to playing members and non-members from 1 January 2015. In addition, the VAT previously paid to HMRC on non-member fees, where those non-members have participated in sport, should be reviewed to see if a claim can be made for the previous three or four years (three years if the membership fees have been exempted from 1 January 2015 and four years if not).
This will involve the reworking of the partial exemption and capital goods scheme calculations to reflect the change of VAT treatment. This may not yield a repayment if the club has undertaken substantial capital expenditure on the playing areas of the club (e.g. pitches), but all may not be lost if fees have been charged and non-exempt supplies are made at the same time, e.g. buggy hire for golf clubs and programme charges for tournaments.
Even if a three or four year claim is not viable, the position from 1 January 2015 will need to be reviewed. It is quite possible that sports clubs will be targeted by HMRC in the future to ensure that the correct treatment has been applied from 1 January 2015.
Finally, the position relating to wholesale supplies of tee times to tour operators is likely to be challenged in the tribunal at some future point. We understand that some of the larger golf clubs have lodged appeals against the FTT’s decision in the Berkshire GC case that the sale of tee times to tour operators should be liable to VAT at the standard rate.
