As an accountancy practice which has many golf clubs as clients at AIT we have more than a passing interest in the news that HMRC is set to argue that the amount it is due to pay private members’ golf clubs back in overpaid VAT.


The figure is believed to be many millions of pounds, and that should be reduced by at least half, following the commissioning of a report that the magazine Golf Club Management has seen.


For those of you who are unaware in 2013 the Court of Justice of the European Union (CJEU) ruled that VAT on green fees at private member golf clubs had been incorrectly applied for several years.

The result of this meant that many of ‘not for profit’ clubs were able to claim the VAT back on green fees –  a move which  was worth thousands of pounds to a large number of the golf clubs affected.

After legal arguments and the delays that are part of the legal process, a tribunal judge for the First Tier Tribunal Tax Chamber allowed HMRC to employ an American sports’ tax expert, who studied four golf clubs to see whether a process called ‘unjust enrichment’ occurred.

If it had the Government could feasibly not make the payments, but a number of tax advisers said the process had not taken place and saw thee exercise as just a delaying tactic.

However following the investigation the report states: ‘The evidence suggests a pass-through rate [when the tax is passed from the golf club to the customer] of at least 50% … Therefore the commissioners will submit that the appellants would be unjustly enriched to the extent that they are repaid more than 50% of the VAT charged on the green fees.’

“It is extremely unlikely that there was zero pass-through in any of the four cases.”

A golf club manager said that HMRC would use this argument to call for a reduced payment to golf clubs at a tax tribunal hearing at the Royal Court of Justice on Thursday January 22, 2015.

“HMRC are opening the bidding at the 50 percent mark,” he said.

He added that KPMG, which is representing many of the golf clubs looking to receive the rebate, will not take this latest development “lying down”.

This week’s ruling will be eagerly awaited by golf clubs throughout the land.