The final bill could rise even higher, according to accountancy firm Wilkins Kennedy, after the Revenue lost an EU Court of Justice ruling in an ongoing VAT dispute.
Since the 1990s, charges for playing sport at not-for-profit clubs has been exempt from VAT, but HMRC restricted these exemptions to club members. This was eventually challenged in court, and led to a recent EU ruling that declared VAT exemptions should also include charges made to visiting players, meaning possible big pay-outs for golf clubs across the country.
HRMC will now be scrutinising the accounts of golf clubs to ascertain whether they bore the costs of the VAT themselves. Payouts will be distributed on the basis that a clubs’ green fees have been inclusive of VAT, which will be the case for most clubs.
Andy Dawburn, VAT partner at Wilkins Kennedy said, “This is a real breakthrough for golf clubs which can now begin claiming back what’s rightfully theirs. Claimants will be able to back track their claim to March 31st 2009, which could mean a substantial cash injection for some clubs that may have struggled during the downturn.”
The cost to the Revenue could still rise further as a separate case going through the European Court of Justice is debating whether compound interest should also be awarded to golf clubs, in addition to simple interest.