May 19th, 2017
Another VAT windfall for UK courses?
£300 million might be on the table….
Words: John Dean
A ruling that is due to be heard in the Supreme Court this summer could lead to a new round of refunds being applied to golf clubs, which has been valued at £300 million.
Retailer Littlewoods has been engaged in a long battle with HMRC, arguing that tax rebates owed to the company should include compound interest.
If Littlewoods is successful, it could also result in bigger rebates for golf clubs. Because golfing VAT refunds stretch back over two decades, if the precedent is set then this would mean compound interest will increase repayments by up to 100 per cent.
More than 450 golf clubs collectively received hundreds of millions of pounds from HMRC following a Court of Justice of the European Union (CJEU) ruling in 2013 that green fees at private members’ golf clubs should have been exempt from VAT.
According to City A.M., HMRC has claimed a reduction in the VAT rate to five per cent, one of the proposed solutions by the UK Golf Course Owners Association (UKGCOA), which represents proprietary club owners, would cost the taxpayer £15 billion.
“However, in subsequent correspondence HMRC reduced its estimate of the hit to £1 billion, with no further explanation as to how either amount was calculated,” states the paper.
“UKGCOA refutes the estimates and has shared its own calculations. Made in conjunction with accountancy firm KPMG, it puts the annual cost to the exchequer at £520 million.”
Conservative MP for Lincoln Karl McCartney, who is the co-chairman of the all-party parliamentary golf group, urged the government “to move quickly on making decisions” on the VAT situation of both member-owned and proprietary golf clubs.
McCartney said: “It is vital that as a country we have a successful golf industry that provides jobs, contributes to economic growth and keeps the nation fit and healthy.
“Like any organisation, all golf clubs want is clarity and consistency in how VAT is applied. For not–for–profit clubs this is whether the VAT overpayments they receive should be based on compound or simple interest, while proprietary golf clubs just want a level VAT playing field.”
So it could be Ka–ching, Ka–ching for golf clubs this summer. I hope that they spend this windfall wisely.