In Bedale Golf Club v HMRC [2015] TC04619, the First Tier Tribunal (FTT) dismissed an appeal against a VAT assessment, finding that costs relating to the clubhouse bar and lounge were not incurred exclusively for the purpose of making taxable supplies.


Bedale Golf Club (BGC) is a partially exempt business.

BGC made a voluntary disclosure on its VAT return to reclaim input tax suffered over a number of years on costs relating to the items in its clubhouse bar and lounge area, and maintenance for the lift which could be used to access the bar and lounge area.

BGC claimed that the costs related wholly to the taxable supplies of food and drink and so reclaimed all of the input VAT.  The club's arguments included the fact that the clubhouse was being used less by members, and that they were increasingly relying on non-members and private hire occasions for turnover.

HMRC raised an assessment for VAT, calculated on a partial exemption method, on the basis that these costs were not incurred exclusively for the purposes of making taxable supplies but for a mix of taxable and exempt supplies.  They contended that making the clubhouse bar attractive and accessible was at least in part to attract new members, and to entice existing members to use the facilities.


The key factor was whether or not the taxable provision of the food and drink service could be separated from the exempt provision of the golf club membership.

The FTT found that the members' use of the clubhouse was an intrinsic part of their membership.  The clubhouse bar and lounge was used for a variety of reasons, not just the sales of food and drink.  It was also used for team meetings, entertaining other teams after competitions and for trophy presentations as well as the annual general meeting.

The FTT concluded that although there might be a closer link between the costs and the taxable supplies, this does not mean that there is no link between the costs and the exempt supplies, and accordingly dismissed the appeal.


It is interesting to note that the original refurbishment of this clubhouse was the subject of a previous appeal by BGC after they claimed the whole of the input tax on that part of the refurbishment relating to the first floor of the clubhouse where the bar and lounge are situated.

HMRC considered that the input tax should be treated as residual but in view of the amounts involved allowed it to be treated as if it related to taxable supplies.  They expressly stated at the time that this was not a concession for the future.

Although Bedale appealed this decision by HMRC the case was dismissed at tribunal as the input tax had been repaid so the tribunal had no jurisdiction.

Useful links

Bedale Golf Club v HMRC [2015] UKFTT TC04619