UK Golf Course Owners Association supports 5% VAT rate for all golf facilities

Editorin Golf

Why 5% is fair for both private golf clubs and proprietary owned facilities

The following is a statement by Colin Mayes, chairman of the UK Golf Course Owners Association, which represents proprietary-owned golf facilities:

Over the past few months, there has been significant debate and activity relating to the issue of tax inequality in golf.

Currently, not-for-profit private members' clubs are exempt from paying VAT on membership fee income (although 20% VAT applies to visitor green fees), while proprietary-owned golf clubs and courses must pay the standard 20% rate on both membership and green fee revenues. Both types of facilities offer sport and recreation, yet are treated differently - and, in our view, unfairly - by HMRC.

This issue is set to be tested in the courts again this summer by Chipping Sodbury Golf Club, a not-for-profit private members club in the Cotswolds, and follows on from Bridport Golf Club's claim that private golf clubs should not have to pay VAT on green fees, as well as membership fees. A decision on this, following an appeal, is expected later in the year.

The UKGCOA is involved in this debate engaging with many individuals and associations in an attempt to formulate a clear strategy. Clearly, we seek an outcome that is fair and equitable, not just for the UK's golf course proprietors, but golf and participation sports as a whole.

And that's why we seek a level playing field for all and to align ourselves with both England Golf and the Sports and Recreation Alliance by proposing a 5% VAT rate for all sports clubs.

We have concluded the following:

The Chipping Sodbury case

In this case, Chipping Sodbury are making the case that a golf club membership includes within it the right to participate in sport, a supply that should be exempt from VAT. This tribunal is therefore important in that if Chipping Sodbury's case is upheld, then a portion of a golf club membership fee has to be exempt from VAT for all participants, regardless of where they choose to play their sport. An argument for distortion of competition is also being raised, which we know exists and may well be proven.

There are two points to consider:

• The decisions from tribunals are often published two to three months after the completion of the case, so we shouldn't expect any news until July/August 2012
• Whatever the decision, it is likely that the losing side will appeal. Appeals are rarely heard within a 12-month timeframe and, if HMRC lose and appeal, they will refuse to settle any VAT reclaims resulting from the tribunal decision and will advise golf clubs to continue to pay VAT as normal, as they did following the Bridport Golf Club case last year.

For those who have supported the barrister fund we set up to support Chipping Sodbury Golf Club's action, we believe this is important and worthwhile. The Treasury and HMRC will be further pushed towards resolving the issues in sport should, as we all hope, Chipping Sodbury win the case.

Golf is not a special case
Following discussions with the Sports and Recreation Alliance (the organisation that lobbies into Government on behalf of all sports governing bodies in the UK), we do not believe that golf will be considered as a special case. In other words, the issue of VAT distortion needs to be addressed in all sports, not just golf on its own. The Treasury is unlikely to make the application of VAT policy to clubs within the golf industry any different to other sports clubs as this would create turmoil for HMRC. We would be very surprised if there was any other outcome on this.

Therefore, we have concluded that the SRA is our best route to any form of dialogue with the Treasury to achieve fair taxation. The UKGCOA has started such a dialogue with the Parliamentary Liaison officers at the SRA, but it is clear that any actions on our part without the involvement of the recognised representative body for golf will be seen as "self serving" and not for the good of the golf industry as a whole.

England Golf (formerly the English Golf Union) England Golf is a member of the SRA and has been involved with attempting to resolve the VAT inequality for several years. The UKGCOA has met with England Golf on several occasions recently to discuss a number of issues important to golf club proprietors, where VAT has been a major item on the agenda. Some proprietors feel that a straightforward removal of the VAT exemption from not-for-profit private clubs will be some form of success, as it creates a level playing field. However, all this achieves is to take money out of the golf industry into the Treasury's coffers, which is not a good result for England Golf as it will reduce its own income (England Golf is a not-for-profit body) and generally reduce the amount of money available to invest in golf.

England Golf represents the amateur golfer in England, regardless of whether they are members of a proprietary or not-for-profit private golf club. The officers at England Golf work hard each year to acquire significant funding from Sport England for the development of golf. These funds and the affiliation fees we all pay are available for investment back into golf for all affiliated golf clubs that work with their County Development Officers to bring new golfers into the sport. The ownership structure of a golf club is not a criteria in the assessment of allocation of funds.

Part of the UKGCOA strategy on VAT is to align ourselves with England Golf, for three clear reasons:

a. England Golf is the recognised representative body for amateur golf in England, i.e. any discussions at Government level will need to include the views of England Golf.
b. England Golf is a member of the SRA, which, in the opinion of the UKGCOA, is the most likely representative body to be able to achieve our objectives for some form of fair tax.
c. England Golf's committed objective to grow the game of golf in England can only be good for us as golf course proprietors. It is essential we work with them to achieve this in a way that benefits the game of golf, not just a win for one section of the industry at the expense of another.

England Golf has publically stated that it will continue to work towards and support the target of the low rate of VAT across the industry (currently 5% in the UK), for the reasons outlined above the UKGCOA supports this objective.

To summarise the UKGCOA board views:

Chipping Sodbury case - we don't expect immediate success whatever the tribunal decision on this case, but it will be important for it to have the best possible legal representation as the Tribunal Chairman's decision and comments could expedite changes in VAT for sport.
Golf is not a special case - while some in golf believe it should be an exception, it is very unlikely that the Treasury will agree. We believe that "participation in sport" achieving a lower rate of VAT championed by the Sports and Recreation Alliance is the best route to success.

England Golf - is the recognised representative body for our industry, which publically declares its full support for a fair tax regime, works tirelessly for the growth of participation in golf and provides funds to all clubs that have the same goals for growth in golf. We will be failing the proprietary sector if we didn't closely align ourselves with England Golf on fair tax strategies as well as many other issues facing golf course owners.

We welcome proprietors' comments on the above "views of the UKGCOA board". Please send these to Jerry Kilby at, so that we can formulate a final strategy that is supported by a majority of golf course proprietors and be put to England Golf for consideration as a joint strategy statement on VAT.

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