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This Revenue and Customs brief was archived on 4 May 2016. For more information please see Revenue and Customs brief 10 (2016).
1. Purpose of this brief
This brief provides an update on HM Revenue and Custom (HMRC)’s work on unjust enrichment as announced in Revenue and Customs Brief 25 (2014):VAT - supplies of sporting services by non profit making bodies and explains what action members’ golf clubs which submitted claims need to take now.
Members’ golf clubs and other non-profit making sports clubs and their advisers.
Following the judgment by the Court of Justice of the European Union in Bridport & West Dorset Golf Club, HMRC announced that it was considering whether clubs would be unjustly enriched if claims were refunded in full. This brief reports the conclusion of that work.
4. Unjust enrichment update
HMRC’s review found that if claims were credited in full some clubs would be unjustly enriched by 50% and others by 67%. Some clubs disagreed with the conclusions of the review and with HMRC’s position that corporate days and supplies to tour operators are standard rated, as outlined in VAT Information Sheet 01/15: claims by non-profit making members’ sports clubs for overpaid VAT on supplies of sporting services made to non-members. These issues have recently been heard by the First Tier Tribunal (FTT).
Although the question of unjust enrichment is still before the courts, HMRC has decided to pay or credit, subject to conditions (see below), 50% or 33% (depending on the golf club) of the value of valid claims ahead of any court decision. HMRC will credit a claimant’s VAT account if there is an outstanding debt.
The amount repaid or credited to each claimant will depend on the level of green fee charges. Where a golf club charges any green fee now or during the claim period, of over £100 per person for a round of golf, at any time of the year, HMRC will repay or credit 33% of its VAT Information Sheet 01/15 compliant claim. All other claimants will receive 50% of their VAT Information Sheet 01/15 compliant claim. HMRC considers the level of green fees is representative of a club’s ability to pass on the VAT cost to its customers.
5. Next steps
So that HMRC may pay or credit the appropriate amount to each club, please:
notify HMRC that you have checked and where necessary adjusted your claims in line with VAT Information Sheet 01/15 - this helps minimise any errors and we have found a high level of error in claims checked
confirm if your green fees are less than, or over, £100 per person per round
confirm whether or not you would like an interim payment or credit on your account - if you have not checked or adjusted your claim because you disagree with the policy detailed in VAT Information Sheet 01/15, HMRC will not consider your claim until the FTT issues a decision
Please provide the information for points 1 to 3 above and any new or adjusted claims to:
VAT Bridport Claims SO483
PO Box 200
If a club does not pass on to the affected customers the repaid or credited amounts of output tax there may be direct tax implications. For example, trading income from non-members is taxable. Any surplus of non-member income that remains after deduction of relevant expenses is liable to Corporation Tax.
6. New claims
All new claims will be subject to the 4 year time limit in section 80(4) of the VAT Act 1994.
7. Return adjustments
Members’ clubs with over declarations of output tax within certain monetary limits may wish to correct any errors on their VAT returns rather than submit a formal claim under section 80 VATA 94 to HMRC. However in doing so they would not receive any interest. Further information on the monetary limits and which returns may be adjusted is available in VAT Notice 700/45: How to correct VAT errors and make adjustments and claims.
In circumstances where members’ clubs have not taken due care in submitting valid claims, they may be charged a penalty in relation to prescribed accounting periods starting on or after 1 April 2008, where the return due date is 1 April 2009 or later.