European Court finds that VAT on ‘green fees’ is unlawful

Back in March 2012 we reported on the case of Bridport & West Dorset Golf Club, which concerned whether fees charged by a not-for-profit golf club to non-members (known as ‘green fees’) should be exempt from VAT.

Under Group 10 of Schedule 9 to the Value Added Tax Act 1994 the supply by a not-for-profit body to individuals of services linked with and essential to sport or physical recreation are exempt from VAT.  However, expressly excluded from the exemption are supplies to individuals who are not members of a membership scheme.

At trial the First Tier Tribunal found in favour of the golf club on the basis that UK law did not properly implement the VAT exemption as defined in EU law within Articles 132 to 134 of the Principal VAT Directive.

On appeal the Upper Tribunal referred the case to the Court of Justice of the European Union (CJEU) for a ruling.

The CJEU has recently found against HM Revenue & Customs on the same question.  The CJEU held that restricting the sporting exemption from VAT based on the status of the recipient as non-member introduced “a criterion that was deliberately excluded when the exemption was defined” in the Directive.

Although the case concerns golf clubs, it applies to all not-for-profit sports clubs and will be relevant where any not-for-profit sports club charges admission fees to non-members.

Following the CJEU’s judgment HMRC would normally be expected to publish a statement on how they propose to deal with the defective provisions in UK law and claims by not-for-profit sports clubs for repayment.

Sports clubs should take advice on their potential rights to repayment of VAT.

For more information please contact Chris Hook using 0191 211 7801 or [email protected].