The taxpayer in this case - Bridport and West Dorset Golf Club - is a non-profit making members’ golf club. The main issue in this appeal was whether the charges, known as “green fees”, made by the taxpayer, from visiting non-members who play golf on its course, were exempt from VAT, as the taxpayer maintained, or standard-rated, as HMRC determined.

The critical question for the Tribunal was whether the UK's domestic law correctly implements the requirements of what is now article 132(1)(m) of the Principal VAT Directive (Council Directive 2006/112/EEC), formerly (and in identical terms) article 13A(1)(m) of the Sixth VAT Directive.

The taxpayer had, for many years, accounted for VAT on its green fee income in accordance with HMRC's determination but, recent case-law showed that it should not have done so. The taxpayer made a voluntary disclosure by which it sought to recover £140,358.16 of output tax for which it claimed it was not liable to account for. HMRC rejected the voluntary disclosure, and maintained their position that the green fees are standard-rated.

The first step for the Tribunal was to identify the supply in question and then consider whether the exempting provision, applied purposively, and covered the supply identified. If it did so then the Tribunal had to consider whether any of the provisions of article 133 (so far as the domestic legislature has chosen to implement them) and article 134 (which is mandatory) applied so as to remove the exemption from the supply or any part of it.

The Tribunal found that the supply in this case was the right to play golf on the taxpayer's course in exchange for payment, whether of a subscription or of a green fee. The fact that members received additional benefits was considered irrelevant. The important point was that there was no difference between the right to play golf as supplied to members, and that right as supplied to non-members. The Tribunal could not see how it could be disputed that taking article 132 alone, that supply is exempt

The Tribunal found that article 134 did not exclude the appellant's green fee income from the exemption and concluded that the provisions of UK domestic law which distinguish between supplies to members and supplies to others were not capable of properly achieving the objective of article 133(d) of the Principal VAT Directive and therefore do not correctly implement its terms. The Tribunal determined that the provisions of the Directive have direct effect, and that the taxpayer's green fee income represented the consideration for an exempt supply.

The Tribunal concluded that by restricting the exemption to supplies made to members; the UK law was acting contrary to the purpose of the exemption in the Principal VAT Directive. It was not persuaded by HMRC's argument that the exclusion applied to non-members was justified on grounds that it reduced distortion of competition. As a result, it agreed with the golf club that supplies to non-members of green fees were exempt from VAT.

The full text of the case is published on the Tribunal's judiciary website at http://www.financeandtaxtribunals.gov.uk/Aspx/default.aspx