Accountants Deloitte noted that HMRC issued a VAT Brief that gives their views on ‘unjust enrichment’ refunds and ‘not for profit’ sports clubs. 

Following the CJEU decision in Bridport and West Dorset Golf Club (see below), HMRC announced that they would repay VAT to clubs who were overcharged as a result of the CJEU judgment.  HMRC will resist making repayment of VAT where it considers that this will amount to unjust enrichment. It reserved its position on claims.

HMRC now say that they will now pay refunds of 50% or 33% of the sums claimed by golf clubs depending on the level of green fees charged, provided that the claims comply with HMRC’s previous guidance on the computation of the claims. See HMRC Brief 19 (2015)

ECJ case and background

In West Dorset Golf Club Ltd (C-495/12) the European Court of Justice (ECJ) held that all golf 'green fees’ paid to members golf clubs are exempt from VAT.

The ECJ held that green fees paid by both members and guests, in connection with non-profit making members’ golf clubs, fall within the VAT sporting exemption (Art 132(1)(m) of Council Directive 2006/112/EC). Previously, members’ golf clubs had to charge VAT at the standard rate to non-members using their courses.

The ECJ has now held that:

  • Member states cannot differentiate between the recipients of services that are, in essence, identical.
  • The VAT exemption applies to “taking part in sport and physical education in general”.

The ECJ also held that the exemption can be backdated for at least four years, which is likely to lead to a substantial VAT rebate being paid to member’s golf clubs by HMRC. It is not known whether HMRC will appeal, but it seems unlikely.

Note that this ruling does not apply to golf courses that are used to make a profit. When clubs are proprietary owned and for profit they are required to levy VAT on both subscriptions and green fees.


West Dorset Golf Club Ltd (C-495/12) 

HMRC v The Bridport and West Dorset Golf Club Limited [2012] UKUT 272 (TCC) 

FTT Background

Bridport and West Dorset Golf Club is a non-profit making members’ golf club. The issue was whether the charges, known as green fees, made by the club to visiting non-members in return for the right to play golf are exempt from VAT or, as HMRC maintained, standard rated.

Under VATA 1994 Schedule 9 Group 10 Item 3, supplies by non-profit making bodies of services closely linked and essential to sport to individuals taking part in sport are exempt from VAT. However, where the body operates a membership scheme, any supplies to individuals who are not members are excluded from the exemption and subject to VAT.

The tribunal concluded that by restricting the exemption to supplies made to members, the UK law was acting contrary to the purpose of the exemption in the Principal VAT Directive (or, in other words, had failed to “correctly implement its terms”). It was not persuaded by HMRC’s argument that the exclusion applied to non-members was justified on grounds that it reduced distortion of competition. The matter was consequently referred to the ECJ.

HMRC's position

Prior to the ECJ hearing, not being bound by the FTT it released Revenue & Customs Brief 30/11 (issued 27 July 2011) .

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