Beware: the VAT man cometh

Hillier Hopkins LLP

Chartered Accountants & Tax Advisers

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Over the last few months I have attended several VAT verification visits following the submission or golf club repayments returns. Following the seemingly endless queries regarding the club and its “officers” including in one case an enquiry as to any other business they were involved in, they finally got down to the business of the visit. 

As many of you will know the Bridport VAT reclaims had to be adjusted, downwards of course, for “corporate green fees” This also included green fees supplied to/through travel agents. In many cases this was relatively easy to quantify as the numbers were relatively small. In others a notional adjustments was made to reflect this. 

HMRC in its original business brief in 2015 stated that “HMRC considers that where a corporate body purchases a golf day or similar for its own purposes such as to entertain staff or guests this remains ​VATable at the standard rate.”

They also said that “If however the employees of a company purchase a golf day or similar and largely meet the cost themselves then even where there is a small subsidy from the company and even if the invoice is addressed to the company provided there is only limited benefit to the company then this is exempt for VAT purposes”

All of this was very helpful and the old claims were adjusted accordingly. Their later brief in 2016 expanded on this to indicate even if the clubs refer to these as society days if the business uses the golf day for its own purposes and are the true beneficiaries then this remain ​VATable at the standard rate. This change firmly pushed the onus of identifying “corporate “ days back onto the clubs.

So these are the rules albeit that they are still somewhat opaque. The issue here is that so far I have now found several clubs who have completely ignored the rules and not accounted for VAT or charged extra VAT on these type of green fees despite having adjusted their earlier claims.  In the main this is not surprising as firstly the “rules” were not issued till some 10 months after they effectively came into force on 1st April 2014 and secondly were only clarified some 15 months later 

It will therefore come as no surprise that the visits have therefore uncovered this and as a result HMRC have used this as an excuse to review all of the clubs records which has in turn potentially impacted the recovery of at least part of the VAT incurred on their course expenditure. It is important to note that a verification visit is normally a review of the latest quarters VAT return alone and will only be expanded into a review of earlier periods if any errors are found. 

So this is an easy win for HMRC and an easy way to expand their review. In most cases so far clubs have been able to identify at least a few invoices which should have been chargeable to VAT and the clubs have then paid over this VAT to HMRC. The upside has been that this increased VATable income has actually improved their VAT recovery rate.

From talking to the VAT officers at these visits this is very much the first thing they will look at on any visit to a golf club following the Bridport repayments so please check that you are considering this for all “society and corporate” days. 

Yet again we have a case of HMRC providing belated guidance regarding Green fees and charging vat thereon despite having spent over eight years in some cases delaying repayment to clubs in the first place. 

If you have had any issues with HMRC following recent VAT visits we would be interested to hear about these. Please contact Robert Twydle

This ​article is written for general interest only and is not a substitute for consulting the relevant legislation or taking professional advice. The authors and the firm cannot accept any responsibility for loss arising from any person acting or refraining from acting on the basis of the material included herein.