AGCO to take government to court17th October, 2013 by Alistair Dunsmuir
The Association of Golf Course Owners (AGCO) is set to take legal proceedings against the UK government over the issue of VAT in golf.
The organisation is also set to apply for a judicial review of HMRC’s decisions relating to VAT in golf.
The move follows an email from Michael McLachlin, a senior policy advisor to HMRC’s VAT liability team, on October 10, in which he overturned the August 2013 comments by Trevor Probert, who works for HMRC’s Tax Avoidance & Partial Exemption (TAPE) team.
The issue centres on the affiliation fees that English golf clubs pay to their local county associations and their national governing body, England Golf. Every male member of an English golf club affiliated to England Golf, pays, typically between about £10 and £20 per year (approximately between £3,000 and £20,000 per club per year), to these bodies in order to have a recognised handicap.
As this requires a members’ club structure, the members of most proprietary golf clubs have set up their own club that is affiliated to England Golf, which is separate from the golf club company, which is not affiliated. However, because the golf club company pays the fee, VAT is applicable on it, even though it is exempt if paid by private members’ clubs.
There have been several legal battles between proprietary golf clubs and HMRC over the last 20 years, in which the clubs have tried to claim the VAT they paid on the fees back.
In the latest incident, Mr Probert notified Bewdley Pines Golf Club in Worcestershire that the commissioners for HMRC “have arrived at the view that there is no legal basis, both under EU and UK law, for the treatment of affiliation fees as disbursements, principally because the fees are not incurred by the clubs in the name of specific, identifiable members and because the responsibility for payment rests with the clubs rather than with individual members. Many clubs have chosen not to apply the concession and have simply absorbed the fees within their own costs. Where clubs have not applied the concession there can now be no retrospective claim for overpaid output tax.”
On October 10, Vivien Saunders, chair of AGCO, wrote to every English county secretary and England Golf board member, to say that this meant that “it is now impossible for golf course owners to assist in collecting affiliation fees. The only possible way forward now is to make the fee the responsibility of the individual golfer, registering online and paying for the handicap / service if wanted.”
However, on that same day Mr McLachlin overturned Mr Probert’s comments.
AGCO has therefore written to HMRC to demand that it refers the issue to the Upper Tax Tribunal to rule on the VAT status of the affiliation fee charged to proprietary golf clubs. “In the event of any of the decisions made, which we say are wrong, are not corrected, we put you on notice that we intend to apply for judicial review of the decisions,” states AGCO.
“We have now put the HMRC on notice of our intention to apply for a judicial review of the decisions relating to VAT in golf and the distortion involved,” said Saunders.
“We have also served notice on the UK treasury solicitor that it is our intention to apply direct to the European Commission for them to take proceedings against the UK government for their failure to address this distortion.”