Bridport & West Dorset Golf Club, VAT Liability of Green Fees – KPMG Update

The following release has been issued by KPMG to its clients and IS NOT on behalf of England Golf.

Bridport & West Dorset Golf Club Appeal

VAT Liability of Green Fees – Update
Progress in the claims process
HMRC have now asked the Tax Tribunal to put all claims on hold until July so that they can decide whether to argue unjust enrichment. We are discussing this with HMRC and voicing our concern at the length of delay and will keep you informed. We will contact you again shortly to ask for additional information in order to bring your claim up to date.

Unjust enrichment
HMRC would need to show that your pricing structure passed the economic burden of the VAT on to customers. In our experience fees are set by reference to the local market, and VAT has been paid out of that amount. We understand that clubs continue to charge the same price, but based on the decision in Bridport can now retain the full amount instead of paying a proportion to HMRC. This supports our view that fees are generally set by reference to the market regardless of the VAT liability, making the unjust enrichment argument difficult for HMRC to pursue.

Ongoing charges
Given HMRC’s delay in the publication of the Business Brief, we recommend that you rely on the Bridport decision being applicable to your golf club and treat any green fees received as exempt with effect from the start of the current VAT return period. This is on the basis that the decision in Bridport has confirmed that the relevant part of the UK VAT legislation is defective. You should remove any references to VAT from any documents or information relating to green fees. We are informing HMRC that we have given this advice.

Interest on your claims
Interest will be payable on top of your claim. There is ongoing litigation about whether that interest should be compounded. Simple interest will be paid as a matter of course, however you will need to consider taking additional action to protect your potential compound interest claim. We will shortly send you an update setting out the options and an analysis of the potential benefit.