All UK member golf clubs will receive a massive windfall

[Mark Pearce]

Simon they'd argue the VAT is paid by the club and not passed onto the consumer!

They could argue what they like.  THat would simply be wrong, though.

[Duncan Cheslett]

would the clubs not be expected to contact all the visitors that have played under the old system and pay them back the VAT

Apart from being logistically impossible there is no reason why they should. Green fees are a retail sale - just like a pair of jeans at Tesco or a lawn mower at B&Q.  If the agreed retail price is £60 then that is the price that the customer has freely contracted to pay. The fact that £10 of the £60 was VAT that has to be paid over to HMRC is irrelevent to the contract between the vendor and the consumer. The price agreed in the contract is £60.

Only in B2B transactions is a price nett of VAT normally quoted. In this case the purchaser would have a very good case for getting a refund of the VAT, except that he will already have claimed it back on his own VAT return.

[Duncan Cheslett]

Also, how would clubs go about claiming?

I believe that they must have already submitted a claim. I'm pleased to say that Reddish Vale is one of the several hundred clubs to have put their claim in years ago at the outset of this case.

[Adrian_Stiff]

Simon - It is an interesting point and when the clubs received the membership vat refunds about 15 years ago, it was technically the members money not the clubs, this to my mind would be the same, ie if I paid a green fee for £60 last year, they should give me my £10 back. Mark P will understand more. In practice no one (or very few will bother) claims. I think in the HMRC defence they brought this up at the time, but the judge ruled the money should be returned to the club.

Clubs should never really state the vat is inclusive in written form, if they have then the client could reclaim if he could provide a receipt. Some till system include the vat number.

Clubs voted 15 years ago to retain the monies. The logistics to return are obviously crazy. I dont know of any that returned money, but there may have been.

Re claiming back: I think 400 clubs (ish) were involved in the Bridport case. KPMG are trying to work out an easy formula for quick returns with the HMRC. I think the other 1600 can file their own claims now, apparently a law firm is already on the no win no fee case.

1971 - 1990 - last 4 years  <<<these are all different dates and positions that claims could be back dated too.
Commercial clubs getting refunds on the vat of both membership and green fees are also possibles......hence the £3,000,000,000 if the HMRC lost absolutely everything.

Mark - Yes its a balance with members vesus green fees. We have a young membership and they understand that society income/ green fees keep their membership fees low. Members times are before 10.00 every day except Saturday/Sunday 11.00 and after 15.30 everyday...so basically we sell the times in the middle of the day.

Mark you are always welcome at The Players Club and to bring three guests FOC, MarkP, Simon also. There has always been an open invite to GCA members, I cant do the lodgings for free though and Painswick is pretty close (perhaps we should do a Cotswold Quirk again). I have played pretty much everything around RCP but never got to play Deal...real shame.

[Simon Holt]

Thanks gents.  Interesting stuff.  Adrian- muchos for the invite, same to you at North Berwick.

I forwarded the link to a few people and they were sceptical about HMRC and the repayment scenario.  I happen to be in Adrian's camp here but at the same time, I won't be holding my breath.

Clubs like North Berwick or Gullane could claim a pretty punchy number.  I suppose tour operators are the guys that could possibly try and claim some money back off these clubs?

[Adrian_Stiff]

Tour operators are a loser from now on in respect of them dealing with member clubs. Someone like; Your Golf Travel or Golf Breaks would be charging say £200 for a two night-3 round break. HMRC will still want £33.33 off YGT/GB, previously the hotel might have billed them £84 say (£70 nett of tax) and the three green fees say £108 (£90 nett of tax). YGT/GB can no longer mitigate that £18 (as I see it). So The popular 3 day breaks will be c£18 more expensive, unless the clubs discount their green fee which most of you said won't happen (and I agree).

[Adrian_Stiff]

Duncan - My take would be that the judge in his summing up would have said that the Vat was incorrectly administered in order that from now on the green fee and so customer is free of the tax. If the judge decided on returning previous years of incorrectly applied tax then I can only see it as the customers. That customer would have to have provide the club with the receipt, which is difficult/ nearing impossible. I think it is the customers since; a YGT or GB paying a £36 green fee would reclaim £6 presently, so in that case a £36 green fee is £30 Actual charge plus Tax (which can be reclaimed by certain corporate bodies or 3rd party). It is all confusing though and possibly there is a case that a 'golfer' is not owed the £6 since he was never entitled to claim it because the 'golfer' was not Vat registered.

[Sean_A]

Adrian

A golfer wouldn't need to be VAT registered to be given a refund.  The services rendered should have been 0 rated.  Lots of services are 0 rated or certain bodies can calim back the VAT.

Sean

[Adrian_Stiff]

Adrian

A golfer wouldn't need to be VAT registered to be given a refund.  The services rendered should have been 0 rated.  Lots of services are 0 rated or certain bodies can calim back the VAT.

Sean

Sean yes thats the way I view it as well. He would need to have his receipt though which many people (if not eligible to claim) do not keep especially if it went back to 1971.

[Sean_A]

Adrian

A golfer wouldn't need to be VAT registered to be given a refund.  The services rendered should have been 0 rated.  Lots of services are 0 rated or certain bodies can calim back the VAT.

Sean

Sean yes thats the way I view it as well. He would need to have his receipt though which many people (if not eligible to claim) do not keep especially if it went back to 1971.

So I guess the moral of the story is from now on - keep the receipt - epecially for courses one visits a lot.  But I guess we need VAT receipts which I never see clubs issue.

Ciao

[Michael Whitaker]

Adrian

A golfer wouldn't need to be VAT registered to be given a refund.  The services rendered should have been 0 rated.  Lots of services are 0 rated or certain bodies can calim back the VAT.

Sean

Sean yes thats the way I view it as well. He would need to have his receipt though which many people (if not eligible to claim) do not keep especially if it went back to 1971.

So I guess the moral of the story is from now on - keep the receipt - epecially for courses one visits a lot.  But I guess we need VAT receipts which I never see clubs issue.

Ciao

Man... I'm thinking about all the VAT that would be due me if I had receipts! It would cover my subs at RCP for several years at least!

[Niall C]

I tend to agree with Duncan on this one, it all depends on what basis the ticket was sold eg £50 plus VAT or alternatively £60 inclusive of any tax. If say it was the latter then I would have thought there is no obligation to refund a VAT rebate. If however it was the former then I think there is a case for refunding tax that was not liable or has been rebated.

Niall

[Mark Chaplin]

So the only people who maybe able to claim the VAT from the club is the members who sign the visitor book for all their guests!

The only losers in this long term are members of private clubs who will eventually pay VAT on their subs and 20% in one swoop will see lots of golfers giving up their memberships.

Adrian £3b is equal to just over 1/2p in the pound on income tax, HMG will not be refunding that European court ruling or not.

[Lou_Duran]

Adrian

A golfer wouldn't need to be VAT registered to be given a refund.  The services rendered should have been 0 rated.  Lots of services are 0 rated or certain bodies can calim back the VAT.

Sean

I think Mark is right.  The chances of recouping the VAT is about the same as hell freezing over.

But you Europeans have it figured out.  Nice concept, service ratings.  If you only could have the consumer zero (0) rated.  In a recent tour, a fellow traveler on the first leg of a six month trip told me he keeps his residence in Illinois because his pension from his career as a college professor there is free of state taxes.  Now, I have no idea how large his pension is, but I did see him entice a Peruvian four-member wind, string, and percussion ensemble with a $100 note to extend their very enjoyable set during dinner, and he did spring for wine for the table.  I was unaware that public servants could acquire the zero rating- I assumed that we were all in this together- but, again, the good professor has to put up with the cold and snow in his infrequent visits to his tax residence.  I did not have the heart to tell him that he could move to Florida or Texas and avoid paying state income taxes, but so many bad decisions are made to escape the revenuers that I didn't want to add to the problem.

I know I am way off topic, but why can't we just find a simple, fair (in the dictionary meaning of the word), transparent, broad, and less divisive way to generate the necessary revenues to run our governments?  And why get so damned cute about it?  E.g. the "harmonized sales tax" our Canadian friends have to extract another 15% on top of the already steep hotel, car rental, and golf green fee prices.  Nothing nearing "harmonious" in this from my perspective.

[Sean_A]

I tend to agree with Duncan on this one, it all depends on what basis the ticket was sold eg £50 plus VAT or alternatively £60 inclusive of any tax. If say it was the latter then I would have thought there is no obligation to refund a VAT rebate. If however it was the former then I think there is a case for refunding tax that was not liable or has been rebated.

Niall

Niall

If the club paid the VATon the green fees they defacto were sold inclusive of VAT.  How else could there be a claim?  

Ciao

[Adrian_Stiff]

Lou & Mark - The court ruled about 15 years ago that Vat on golf memberships was incorrect. HMRC paid out then, why would they not pay out this time? Has this ever happened before that the HMRC have dissed EU law and just refused? What is the point of taking something to Brussells?

[Ryan Coles]

I manage a members Club and we signed up to be part of the KPMG case. What I'm not yet clear on, is how far the claim will go back. When we submitted to KPMG several years ago it was worth £80k to us less KPMG's cut if successful. I've heard four years worth and also 15 years worth, not sure if anyone can shed any light. KPMG have just issued a blanket holding email.

[Adrian_Stiff]

Hi Ryan nice to see you here.  The latest I have heard is still complicated and up to interpretation.

On one hand there is a case that the money belongs to the green fee payer, but perhaps only if the club stated on their website that it DID include Vat, if it made no mention then it was just the price. About 20 years ago there was something passed that a tariff should never have vat added and the price that the customer paid should be clear. (I don't know if I have that exact wording clear but it basically relates to having the mention of Vat on your website...I took it off ours several years ago when I was warned that you wont be able to keep it if Vat is mentioned.)

On another hand if a club receives the vat on £x,0000  of green fees back then it has incorrectly applied its inputs and claimed back vat that would then not be claimable under the exemption/partial exemption. So if a club is thinking its getting 20% or 17.5% back there will be some formula agreed by HMRC as to the pay out.

Its a right bloody mess and needs sorting for all types of clubs, hopefully this ruling will be enough to balance all the scales!

If this were the case then that means the club cant in theory return both the Vat to the customer and repay the clawback.

If somebody were to claim the Vat back on a green fee from yesteryear then they would need proof. That if applicable is just down to the individual and how many people will have a recipt from a green fee for 1992 AND want to go to the trouble of the reclaim.

It is still unclear if its 4 or 14/15 years. I think it is 15 years or the year that Bridport won from. There is HMRC statement on the metholody of the repayment coming soon was the last I heard.

[Ryan Coles]

Thanks Adrian - I thought it would certainly move our partial exemption figure in future but it never occurred to me that it could be retrospective. The lord giveth and the lord taketh

[Greg Gilson]

I'm sorry if this has been specifically answered already - I skimmed the posts & saw my type of situation mentioned in a number of places but I'm not sure there is absolute clarity.

I am an Australian -based Tour Operator. I have been sending Aussie golfers to many UK private members clubs for several years and , presumably, paying VAT on the green fees. I only heard of this ruling via GCA. Last week I emailed (as a sample) 5 of the bigger clubs I deal with - asking them what their position & interpretation was. I wasn't specific but it was probably be pretty clear I'm keen on a refund if that's what they get for the VAT I/they have paid. 4 are yet to reply and the one that has just said they are "considering the implications".

Obviously, the tyranny of Distance means I'm out of the loop so would appreciate guidance from any of the learned locals.

Feel free to IM me if that's more practical. thanks!

[Ryan Coles]

KPMG's latest update is that HMRC has informed the tribunal that they need time to decide whether to make a case for unjust enrichment and have requested the tribunal put claims on hold until July.

KPMG's advice is for members clubs to treat green fees as VAT exempt from the current reporting period.

Seems this will run for a long while yet.

[Patrick_Mucci]

Adrian,

Will the refunded funds be deemed taxable income ?

Any club that doesn't use the windfall to reduce debt, first, would be foolish.

[Sean_A]

Burnham has been operating as if it will never get the return.  I would love our to to receive the money, but in truth, its not club money.  The club only acts as an agent for paying the money to HMRC.  The money belongs to the customers who paid it.  I started to keep receipts a year or so ago and believe me, clubs will be getting my claim calls.  I wouldn't be surprised if HMRc strikes a deal whereby clubs get a percentage of the money, but still must refund customers who can demonstrate proof of purchase within a time limit.

Ciao

[Jon Wiggett]

Of course for clubs where greenfees are a high % of their turnover this will be a windfall but this could be a problem for many smaller clubs as if their VAT liable turnover is less than the registration limit HMRC might be asking for reclaimed VAT to be paid back. For many clubs this might mean any renovation work to the course, buildings, any machinery purchases, etc.

Jon

[Adrian_Stiff]

Adrian,

Will the refunded funds be deemed taxable income ?

Any club that doesn't use the windfall to reduce debt, first, would be foolish.

I am not 100% sure, though I have heard and read bits, mainly that HMRC and KMPG are agreeing a formula based on the vat levels of 17.5% (the major period of Vat) 15% (a short period) and 20% (current) consolidated, that figure would not be what HMRC paid out as the inputs that the club have claimed would be factored in to reduce the payout. From that point a deal will be struck and I would expect the payment figure to ALL private members clubs will be around 10%. I don't think anyone can personally reclaim. I think no private members club could be at a loss and have to repay. I suspect you could see a crazy situation where a subscribing club got money back (less the KMPG cut) and another got it  back (and pay no commission) in which case the leading 400 clubs would not do as well as the other 1500! I have not heard anything more about dependence of how you sold the green fee, ie 'if you displayed Vat was included somewhere in your tarriff' you get disqualified.

Not many private clubs have much significant debt in the UK (in excess of £250,000) Very few clubs have a borrowing to expand mentality and most times projects are funded by levy, by selling an odd bit of land or perhaps by a wealthy members donation, they also don't really accumulate much excess cash via profits. The principle being the costs of running the golf club are divisional by the membership, so set up a budget in advance what they think it is all going to cost and bill the membership in advance.