Non-Profit Making Sports Clubs now don't need to add VAT on fees charged to non-members and could get a repayment of VAT for VAT charged in the past
HMRC has released a Brief in respect Members' golf clubs and other non-profit making sports clubs
HMRC’s brief outlines their revised policy following the recent CJEU decision in Bridport & West Dorset Golf Club. HMRC now accepts that supplies of sporting services to both members and non-members of non-profit making sports clubs can qualify to be treated as exempt from VAT. HMRC intends first to deal with repayment claims by members clubs who decide to reimburse non-members. Secondly, it will examine the scope for restricting repayments, on unjust enrichment grounds, to clubs who do not make such reimbursements.
HMRC now accepts that supplies of sporting services to both members and non-members of non-profit making sports clubs qualify to be treated as exempt from VAT. This is provided that the services are closely linked and essential to sport and are made to persons taking part in sport. HMRC will legislate by 1 January 2015 to reflect this.
HMRC will ensure any future changes comply with the decision of the CJEU.
Claims for Overpaid VAT
HMRC intends to deal in two phases with claims for the repayment of overpaid tax for previous periods:
Phase 1. Members' clubs that decide to reimburse non-members who were incorrectly charged VAT on sporting services supplied to them (including members' golf clubs that incorrectly charged VAT on green fees) and will adopt the reimbursement arrangements explained in Sections 9 & 10 of Notice No. 700/45 'How to correct VAT errors and make adjustments or claims'.
Where a members' golf club or other non-profit making sports club considers it has overpaid VAT on sports related services it may make a claim to HMRC under section 80 of the VAT Act 1994 for repayment of VAT incorrectly accounted for. This means that clubs will need to demonstrate that they have made arrangements to reimburse the VAT to non-members who actually paid it, and make a legally binding commitment to do so in a timely manner.
Phase 2. Clubs that do not adopt reimbursement arrangements
HMRC are examining the scope for restricting repayments to clubs not making arrangements to reimburse the paying non-members to avoid the unjust enrichment of members' clubs.
If you need any help dealing with a repayment claim, then please do contact us.
HMRC's Business Brief can be found here.