The above Brief explains in details HMRC’s view of the VAT implications of the judgment in the Bridport & West Dorset Golf Club appeal and in particular the treatment of supplies of sporting services by members’ clubs to non-members. The Revenue Commissioners have already published an eBrief on the matter which sets out their position following the case.

As we reported in Chartered Accountants Tax News, the Court of Justice of the European Union (CJEU) in this case found that green fees charged by members’ clubs are VAT exempt.

The Brief explains HMRC’s:

• interpretation of the judgment and the subsequent change to policy as a result
• approach to repayment claims by non-profit making golf clubs and other members’ sports clubs in respect of VAT incorrectly charged to non-members

and updates the position set out in Revenue & Customs Brief 30/11 issued 27 July 2011.

By way of reminder, the Bridport appeal concerned green fees paid by visitors (non-members). Bridport had made a claim for repayment of VAT on green fees arguing that the exclusion of supplies made to non-members was not permissible under EU law.

The CJEU found that where a supply is made by a non-profit making body it is immaterial whether it is provided to a member of the body or a visitor. It took the view that a Member State has no power to exclude certain groups of recipients of services from the benefit of the exemption and ‘additional income’ could not be construed in such a way that it would lead to such a restriction in the scope of the exemption.

The CJEU also rejected the argument that the exclusion of supplies to non-members was permissible on the basis that it had the effect of reducing distortion of competition between members clubs and commercial organisations.

As a result of the CJEU judgment, HMRC accepts that supplies of sporting services to both members and non-members of non-profit making sports clubs qualify to be treated as exempt from VAT. This is provided that the services are closely linked and essential to sport and are made to persons taking part in sport. HMRC will legislate by 1 January 2015 to reflect this.

In relation to claims for overpaid VAT, HMRC intends to deal in two phases with such claims for repayments for previous periods, split between situations where clubs either reimburse non-members the incorrectly charged VAT or do not do so. Details are available in the brief.

HMRC also remind claimants who intend to reimburse non-members of the need to ensure that their claim is adjusted to reflect any over claim of input tax by application of their partial exemption and/or capital goods scheme calculations.

HMRC are also examining the scope for restricting repayments to clubs not making arrangements to reimburse the paying non-members to avoid the unjust enrichment of members’ clubs. Further advice will be issued on these claims after a conclusion has been reached on this point.

Where a submitted claim has already been rejected by HMRC and the claimant has not appealed, HMRC state that the claim cannot now be resubmitted. Any claims submitted now will be a new claim subject to the four-year time limit.

Finally, HMRC advise that it should be noted where amounts of overpaid output tax are repaid and not reimbursed to affected customers, there may be direct tax implications. For example, trading income from non-members is taxable and therefore any surplus of non-member income that remains after the deduction of relevant expenses is liable to Corporation Tax.