The European Court of Justice gave judgment in the Bridport Golf Club case on 19 December 2013. This judgment concluded a long running argument concerning whether members golf clubs should charge VAT on green fees paid by non members. It does not apply to profit making propriety clubs. But it has a wider application than golf.

The Issue

The Bridport ECJ judgement concerned whether the UK was correct in adding an extra condition to the law regarding the VAT sporting exemption which prevented the exemption applying to sporting services provided to non members of membership clubs. e.g. non member green fees.. The Court rejected this and other HMRC arguments justifying the distinction in UK VAT treatment.

In my view the ECJ Judgment is robust and since EU law takes precedence over UK law it will be possible to apply the judgement for past periods.

This means that any members sports club that made a separate charge for non members to take part in sport, on which they charged VAT, can make a claim for 3 years over declared VAT. This will be subject to a partial exemption restriction. This means that although they can claim the overpaid output VAT they will have to make a deduction for over recovered input VAT. But one would expect the output VAT to exceed the input VAT meaning a refund will be obtained. In the case of Bridport  this came to £140,000.

Who Can Claim

The case concerned the principles behind the operation of the VAT sporting exemption and has a wider impact than just golf clubs. HMRC gives sport a very wide definition. The list at the end of this note is the official list of HMRC accepted sports and you will see it encompasses everything from Arm Wrestling to Model Planes.

Theoretically any non profit making sports club that is VAT registered, treats its membership subscriptions as exempt and charges a separate taxable fee to non members to take part in sport will be able to make a claim. It only applies to sports participation though. Even the HMRC list isn’t wide enough to include drinking as a sporting activity so a fee paid by a non member to use social or bar facilities will remain taxable.

You will note that the HMRC list includes :

Angling
Field Sports
Sailing
Snooker
Shooting
Tennis
Badminton
Bowls
Hiking
Narrow Boat Cruising
Hovering (no idea)

If you are a non profit making club that makes a separate taxable charge to non members then a claim may be possible.

The VAT Complexities

There are two main complexities..

The first will be to ensure that the claim satisfies the Bridport tests. Clearly golf is a sport where members and non members generally play the same course and obtain an identical sporting service. This may not be true of some other sports and a careful analysis should be undertaken to ensure HMRC cannot reject the claim.

The second will be partial exemption. It is important to ensure that the optimum approach to VAT recovery is adopted and its a very technical area.

If you think may be entitled to a make a claim give me a call. Initial discussion will be free.