[Ryan Coles]

http://www.hmrc.gov.uk/briefs/vat/brief2514.htm

Latest update from HMRC.

Clubs claiming have much to ponder and a lot of work to do.

[Paul Gray]

Thanks Ryan.

Phase 2 would seem to be the salient point to keep an eye on, unless clubs can realistically claim, without incurring such high costs that the exercise would become pointless, to be making suitable arrangements to reimburse guest.

[Adrian_Stiff]

Cheers Ryan - Looks like the HMRC are not going down without a fight and seems to me that whilst green fees are vat exempt now (are you accounting them as exempt now?) getting refunds from previous years will be a tough battle that the HMRC will load up with so much red tape it might be too much work. 5% tax for ALL seems to be gaining momentum.

[Ryan Coles]

We've been treating greenfees at VAT exempt since 1st April.

It was interesting that the revenue are saying all those who intend returning the money, send in your claims by all means. They've set up the PO Box knowing that not a single club will bother.

Those with KPMG from the outset are probably still worth pursuing as these are protected claims that can go back more than 4 years. Adjusting the partial exemption figure retrospectively will be a real headache and clubs who've embarked on large capital projects probably need to establish if its even worth it as the retrospective VAT adjustment could cost more than the income from the refund.

KPMG will earn their 10% in preparing the claims it seems. Those who didn't sign up may not feel as bad now.

[Adrian_Stiff]

Yep, looks like a whole bag of worms and far different from what KPMG were looking for, ie an agreed figure based on Vat at the various rates minus an across the board number to reflect the vat reclaim.

Main thing is it is better going forward I think they should do the same for proprietary clubs as in reality they are the same.
 

[Ryan Coles]

I read and follow a lot of Vivien Saunders campaigns and she is an extremely impressive person and certainly someone you'd like on your side.

I do feel though that perhaps she could put more weight into the social and health benefits of golf as reasons for changes to Govt policy for proprietary clubs.  Rather than try and create an us and them by attacking members clubs i.e. make the case for golf for proprietary clubs to have the same reliefs as members clubs rather than for members clubs reliefs to be removed. To an outsider some of her youtube videos could be perceived as a form of class war or politics of envy, even if fundamentally she is correct in what she says.

[Paul Gray]

She is of course absolutely right, although I also get the impression she thinks she's defending the rights of the masses to play golf. I had this discussion with the membership manager at a proprietary I used to work at, a none golfer who was convinced that by producing his sales patter on cue he was giving the working man a chance to play a game he otherwise wouldn't have access to. He simply didn't believe me when I pointed out that the vast majority of clubs are full of scum now, not just the proprietaries!  

But all joking aside, the argument surely has to be that proprietaries should also be able to avoid charging tax to golfers. Tax on profits is a different issue but surely there's a case for nil tax at point of sale as the activity being undertaken by the customer has huge cost saving implications for the state. Just a thought.

[Adrian_Stiff]

I think that most times she is right but she alienates people rather than gathering them onboard and goes off the subject. So I think she goes about it the wrong way really. I don't like the way she does things to hurt the private member clubs. Without being sexist it would not be the way most men would go about it.

[Ryan Coles]

The latest on this is that HMRC are paying 50% to most Clubs within the next two months and continuing to argue unjust enrichment on the remainder. Larger claims will only receive a third at this stage. I take this to mean the big boys like The Berkshire etc.

Good news for some, bad news for others and for those who didn't get involved with the original case, probably a sense of what might have been, as they are limited to 3 years worth.

Those clubs without debt or money left over after this helps clear it, will they invest it in course improvements? or subsiding the next couple of years subscriptions?

[Ryan Coles]

duplicate

[Adrian_Stiff]

That all seems pretty fair the way that they have sorted that out for the Private member clubs.

I think if they just levelled the playing fields now re Vat going forward for the For Profit clubs then that would be fair.

I think many it will help them upgrade machinery, some will do bits and pieces on the course.

[Ryan Coles]

Today it was announced that HMRC have dropped the appeal regarding unjust enrichment and clubs will get 90% of their claim value + simple interest - KPMG's % for those who made protective claims at the outset of the Bridport & West Dorset case.

Another battle is due to commence as clubs look to claim compound interest which in many cases is more valuable than the claim amount. 

Good news for members clubs, most will likely spend on the course improvements  / drainage.

CASC changes are causing headaches for many though. Lots will be forced to deregister losing 80% business rate relief as they no longer meet the criteria. Some will carry on regardless no doubt and hope they don't get a knock on the door.

The biggest trend I see at the moment and I'm not sure it's good for course architecture is how many clubs are doing or looking to do landfill either on spare land or on the existing course.  Lots of committees are making a mess of it though by being unreasonable or unrealistic and forgetting that any deal has to be mutually beneficial. 

[Duncan Cheslett]

That's great news for small members' clubs like ours, Ryan.

We haven't exactly been holding our breath waiting for the 50% which appeared to be the best likely outcome, so now that it looks like HMRC have capitulated we can maybe look at finally getting our bunkers redone!

We won planning permission a couple of years ago for landfill on an outlying part of our property but members voted against it for fear of upsetting our neighbours with hundreds of trucks rumbling down small roads. It was estimated that it could bring in £100k. Methinks the plan needs revisiting!

As for CASC, I attended an England Golf seminar late last year dealing with the potential problem of the new rules prohibiting income from non members of more than £100k per annum. The solution for small clubs at least is simply to set up a separate subsidiary trading company to manage all the house activities and then for it to pass on the net profits to the club after all associated costs, thus sneaking under the £100k threshold. All legal and above board and exactly what charities have done for years.

Ryan, do you have a link for the news that HMRC have dropped their appeal? Google has only given me the original tribunal announcement from December.

http://www.golfclubmanagement.net/2015/12/tribunal-finds-in-favour-of-private-golf-clubs-in-major-vat-hearing/

[Ryan Coles]

Duncan


Have forwarded you a copy of the email.


The stumbling blocks for many is around the affordability and low/modest incomes. The income condition is a pain, logistically, but can be overcome. Some won't want to have members paying different rates of subscription. Does your Club have a membership category that complies?

[Adrian_Stiff]

Duncan


Have forwarded you a copy of the email.


The stumbling blocks for many is around the affordability and low/modest incomes. The income condition is a pain, logistically, but can be overcome. Some won't want to have members paying different rates of subscription. Does your Club have a membership category that complies?

Are you on CASC Ryan?

[Ryan Coles]

We were but will be de-registering. It's a hit financially but gives us more freedom and we didn't want to go down the route of subsidised memberships. As we become more commercial, we just don't comply with the intentions of the scheme as its now written.

I'm sure some will stay and not comply, but I think with the various cases against HMRC, politics will mean they'll probably be sharpening their knives for golf clubs.

Long term and perhaps never term, we do have the potential maybe to sell for housing. As a Casc the benefits of that wouldn't be for the shareholders. 

[Adrian_Stiff]

Yeah that was I was thinking that coming off gives you options. £60,000,000 between 600 members is a nice distrbution. Worth doing a pre-app.

[Duncan Cheslett]

Duncan


Have forwarded you a copy of the email.


The stumbling blocks for many is around the affordability and low/modest incomes. The income condition is a pain, logistically, but can be overcome. Some won't want to have members paying different rates of subscription. Does your Club have a membership category that complies?

Many thanks for the email, Ryan.

We are minded to put in place an "affordable" membership category which enables play once per week on Sunday afternoons, Mondays, Tuesday afternoons, and Thursday and Friday afternoons subject to availability. These are all quiet times on the course and with the launching this year of a twelve hole qualifying competition on Thursday evenings will enable the earning of a CONGU handicap.

We do not anticipate a huge take-up of this membership category, but at less than £500 per annum it complies with the CASC regulations.

We also do not anticipate resistance from existing members who are getting much better value for money with unlimited golf at any time for £900 per annum.

The bulk of our course is situated in the middle of an officially designated Country Park, so our potential for residential development is virtually non-existent. On all levels it suits us to remain a CASC, not least because of the £20k per year we save on our business rates.

[Ryan Coles]

Yeah that was I was thinking that coming off gives you options. £60,000,000 between 600 members is a nice distrbution. Worth doing a pre-app.

That is my albeit rather optimistic sentiment Adrian. Once a Casc always a Casc is the mantra. You cannot come out at will, we did comply, we don't under the new rules. All things considered we're probably better out than changing to comply.

What Duncan is suggesting is also probably right for them. It complies and as long as they don't hide or bury the category of membership hmrc probably can't grumble. It is designed around their stipulations.

The new CASC rules are a tough one for members clubs. If I was working for a proprietary I would probably think that the trading advantage needed to be removed or the playing field levelled.

[Jon Wiggett]

The new CASC rules are a tough one for members clubs. If I was working for a proprietary I would probably think that the trading advantage needed to be removed or the playing field levelled.

Quite right Ryan, a members club should be used, run and paid for mainly by the membership. It should not be trying to generate excessive income from non members. In reality though how many supposed members clubs are run by a general manager who views the membership as clients not employers. Too many clubs are more interested in the bottom line and not the membership which is why so many struggle today.

Jon

[Sean_A]

Do the new CASC rules set a limit on visitor/guest/tournament income? 


Jon


Managers are caught between trying to keep courses available for members, but at an affordable price. Part of the reason memberships are down is due to increased dues.  Combine that with old average club age when many folks will be on fixed incomes and it shouldn't be surprising that managers are looking for way to increase non-membership revenue.  Guys like me would be happy to pay an extra £200 a year to reduce outside revenue, but many are not of the same opinion. 


Ciao

[Jon Wiggett]

Sean,

this is a bit of an old theme for me but many so called private members clubs have made a rod for their own backs. In the halcyon days of the 90's early 2000's when many clubs had waiting lists too many ran after increased levels of turnover. Courses that before saw very little play through the winter were suddenly supposedly open for play all year round. Club bars that were shut on Mon-Tues, Wed to Fri open for 2 hours over lunch and 4 till 8 at night and at weekends open from 12 through to 9 ish were opened all day all week. Restaurants that only opened on the weekend were also opened through the week. All this costs lots more.

I would bet that most members of inland courses in the UK would be happy if such times came back into force if it led to a reduction in the cost of membership.

Jon

[Sean_A]

Jon


Maybe you are right.  Most clubs I visit are quite empty most of the time.  I really liked the Leckford approach of no pro, no bar, no house staff.  There is fridge in the kitchen which people can use for byo drinks. A bbq folks can use if they want to hang out. 


Ciao

[Thomas Dai]

What would the position be for a private members club who have franchise catering and where the caterers host outside functions (which don't necessarily include club members) but the clubs bar provides the liquid refreshment?


and


a private members club which has an 18-hole course that is for the club members and their guests (plus the usual greenfee visitors and societies) but also has a 9-hole course that is operated on a pay-n-play basis?


Advice appreciated.


atb

[Sean_A]

Wow, £100,000 a year trading with non-members!  The result of this will be status quo for smaller clubs, but increased visitors fees for big clubs..not that bigger clubs were going to stop increasing fees anyway.     


Ciao

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