In HMRC v Stoke By Nayland Golf and Leisure [2018] UKUT 308 (TCC), the Upper Tribunal (UT) found that a member’s golf club was not commercially influenced by the adjacent hotel. VAT exemption on green fees applied.

  • Stoke By Nayland Golf Club is on the site of a Hotel and Spa resort.
  • The golf club was transferred to a separate company, ‘Leisure’, in 1996.
  • From 2009, Leisure took over receipt of the green fees which prior to this had been received by the Hotel and Spa resort company (‘Club’) and were subjected to VAT.
  • Leisure is a company limited by guarantee, and is considered to be not-for-profit. The green fees were treated as exempt in accordance with the Bridport and West Dorset Golf Club decision.
  • HMRC decided that Leisure did not qualify for the exemption. It did not qualify as a non-profit making body as it was under the commercial influence of Club.
  • Leisure appealed.

The First-Tier Tribunal concluded that Leisure did qualify. The UT dismissed HMRC’s appeal:

  • Although Leisure was incorporated around the time when the sporting exemption for non-profit making bodies was introduced, based on the evidence the UT concluded it was not a VAT motivated decision. The Halifax principle did not apply.
  • The Board Members of Leisure were appointed because of extensive and relevant business experience not because they would agree to all of the Managing Director of Club’s wishes.
  • The Directors of Leisure acted independently in their dealings with Club:
    • Leisure negotiated licence fees with Club and the UT considered these negotiations and the licence fees agreed to be arm’s length.
    • The Club FD acted as a book-keeper for Leisure and did not have any more responsibility than that.
    • Cross-charges between Club and Leisure in respect of salaries, insurance, hire of equipment and business rates etc. were on a fair and reasonable arm’s length basis.

The sporting exemption applied to the green fees.


Green fees (not for profit clubs) VAT

Abuse of rights: VAT

External link HMRC v Stoke By Nayland Golf and Leisure [2018] UKUT 308 (TCC)