Bridport Golf Club – VAT Opportunity
Bridport & West Dorset Golf Club Ltd (‘Bridport’) is a non-profit making members club and it was its view that the entitlement to apply VAT exemption to charges for playing golf to its members should equally apply to non-members.
HMRC did not agree with Bridport’s view and as a result a case was taken to the UK VAT tribunal where Bridport challenged HMRC’s view that green fees charged to non-members was subject to the standard rate of VAT. HMRC’s view was based on the UK legislation in VATA 1994 Schedule 9, Group 10 item 3 which states that:
“The supply by an eligible body to an individual, except, where the body operates a membership scheme, an individual who is not a member, of services closely linked with and essential to sport or physical education in which the individual is taking part”
NB: Bridport are an ‘eligible body’ for the purposes of the above.
In short, the UK law excluded supplies to non-members from being treated as VAT exempt. Bridport was successful at the First Tier tribunal and following appeal by HMRC to the Upper Tier tribunal it was decided that the case would be referred to the European Court of Justice (‘ECJ’).
The judgment went in Bridport’s favour and confirmed that:
- The club was an ‘eligible body’ within the definition of VATA 1994 Schedule 9, Group 10, Note (2A) and a non-profit making organisation within article 132(1) (m) of the EU Principle VAT directive;
- The supply of granting visiting non-members the right to use the golf course is closely linked to sport;
- It is provided to persons taking part in sport; and
- It is essential to the transactions exempted by article 134 (a) of the EU Principle VAT directive.
The ECJ found that all supplies of the facility to play golf provided by non-profit making clubs is exempt. There can be no exclusion from exemption by reference to green fees being income not arising directly from memberships. It was also held it is not possible to apply a general exclusion which narrows the scope of the exemption as provided on the face of the legislation. Essentially, UK law failed to correctly implement the terms of the of the EU Principle VAT directive.
No official guidance has yet been issued by HMRC who, it is understood, is considering how best to manage the processing of claims. If not already done so, any clubs that mirror the fact pattern of the Bridport decision should consider making a claim. However, compilation of claims will not be straightforward and will need to include due consideration of a number of issues including unjust enrichment and partial exemption.