Courts abolish VAT on green fees -member owned clubs

Beaulieu

I assume that Revenue in Ireland will have to implement this ruling...

http://www.golfclubmanagement.net/2013/12/ruling-green-fees-must-be-exempt-from-vat/?utm_source=rss&utm_medium=rss&utm_campaign=ruling-green-fees-must-be-exempt-from-vat

Not sure how much it will add to the coffers - given the current VAT rate of 9%. But say an average club takes in €75,000 in Green Fees/Open weekday competition then 75k@ 9% = say €6.3k and you can reclaim 4 years VAT so it could work out at approx €25k of a refund for an "average" club. Some will get a lot more, others less.

mag

a possible serious windfall & competitive edge for member owned clubs

http://www.irishgolfdesk.com/news-files/2013/12/21/millions-for-irish-golf-in-vat-refund-bonanza.html

TheIrishGrover

Troika gone a week and it begins from the top again........

Russman

TheIrishGrover wrote: »

Troika gone a week and it begins from the top again........

WTF ??
A ruling from the Europeans on a case taken by a UK club................?

A New earth

Beaulieu wrote: »

I assume that Revenue in Ireland will have to implement this ruling...

http://www.golfclubmanagement.net/2013/12/ruling-green-fees-must-be-exempt-from-vat/?utm_source=rss&utm_medium=rss&utm_campaign=ruling-green-fees-must-be-exempt-from-vat

Not sure how much it will add to the coffers - given the current VAT rate of 9%. But say an average club takes in €75,000 in Green Fees/Open weekday competition then 75k@ 9% = say €6.3k and you can reclaim 4 years VAT so it could work out at approx €25k of a refund for an "average" club. Some will get a lot more, others less.

Don't know if the members clubs in Ireland have been claiming VAT back on some purchases by offsetting against the VAT they collected on green fees. If they have then the VAT reclaim would not be as high.

Russman

A New earth wrote: »

Don't know if the members clubs in Ireland have been claiming VAT back on some purchases by offsetting against the VAT they collected on green fees. If they have then the VAT reclaim would not be as high.

Will the reclaim still not be the value of the relevant "sales" VAT they paid or offset though ?

A New earth

Russman wrote: »

Will the reclaim still not be the value of the relevant "sales" VAT they paid or offset though ?

Sorry, don't know

PARlance

A New earth wrote: »

Don't know if the members clubs in Ireland have been claiming VAT back on some purchases by offsetting against the VAT they collected on green fees. If they have then the VAT reclaim would not be as high.

It wouldn't make any difference at all.
There is no difference in the Net effect.

PARlance

2012
Club A:
Vat from green fees 10k
Made no purchases.
They would have paid the Rev Comm 10k.

Club B:
Vat from green fees 10k
Made purchases, Vat element was 2k
They would have paid the Rev Comm 8k

It has now come to light the there should have been no VAT on green fees.
Both clubs get a cheque back for 10k

blue note

PARlance wrote: »

2012
Club A:
Vat from green fees 10k
Made no purchases.
They would have paid the Rev Comm 10k.

Club B:
Vat from green fees 10k
Made purchases, Vat element was 2k
They would have paid the Rev Comm 8k

It has now come to light the there should have been no VAT on green fees.
Both clubs get a cheque back for 10k

Assuming they still have to register for VAT. I assume plenty of other golf club activities are VATable.

PARlance

blue note wrote: »

Assuming they still have to register for VAT. I assume plenty of other golf club activities are VATable.

Absolutely, I was just using a simple example to prove the point.

bustercherry

I can't for the life of me see how the clubs get to keep this money? If the clubs changed VAT on goods/services, they are collecting on behalf of revenue (minus and VAT deductions). Surely the VAT is to be refunded to the source not the agent?

Derek Zoolander

bustercherry wrote: »

I can't for the life of me see how the clubs get to keep this money? If the clubs changed VAT on goods/services, they are collecting on behalf of revenue (minus and VAT deductions). Surely the VAT is to be refunded to the source not the agent?

they have collected VAT on behalf of revenue - that VAT was not applicable, so revenue need to return to clubs as they have no record of the source for the VAT just the collection agent - as stated the interesting question will be if the clubs will be obliged to return it to the people who paid green fees in the first place, I'd imagine that some records of who exactly paid green fees may go missing

Russman

Its a interesting one alright.

Do green fee receipts issued by the club have VAT itemised on them ? I've no idea off the top of my head. Should they ?

Could a club conceivably argue that they were paying VAT due on green fees earned, without charging VAT on individual green fees ? ie saying they were absorbing the VAT hit to avoid increasing prices. I know its a stretch, I'm just throwing it out there.

Can't imagine clubs having the ability to track down people who paid green fees, even if they kept records. All I've ever had to give when paying a green fee was my name and maybe my home club, never any contact details.

Then again, could Revenue argue that since clubs can't identify who should get the VAT, they (Revenue) are going to keep it ? I dunno, minefield.

I suspect the clubs will get their refunds, easier for all concerned, albeit costly for Revenue. If Angela hears of this she won't be happy !!

bustercherry

Derek Zoolander wrote: »

they have collected VAT on behalf of revenue - that VAT was not applicable, so revenue need to return to clubs as they have no record of the source for the VAT just the collection agent - as stated the interesting question will be if the clubs will be obliged to return it to the people who paid green fees in the first place, I'd imagine that some records of who exactly paid green fees may go missing

Yep, so it's the responsibility of the club to return it. I'd say clubs would be better off doing feck all. Once you mess with the revenue, there is only one winner.

bustercherry

Russman wrote: »

Its a interesting one alright.

Do green fee receipts issued by the club have VAT itemised on them ? I've no idea off the top of my head. Should they ?

Could a club conceivably argue that they were paying VAT due on green fees earned, without charging VAT on individual green fees ? ie saying they were absorbing the VAT hit to avoid increasing prices. I know its a stretch, I'm just throwing it out there.

Can't imagine clubs having the ability to track down people who paid green fees, even if they kept records. All I've ever had to give when paying a green fee was my name and maybe my home club, never any contact details.

Then again, could Revenue argue that since clubs can't identify who should get the VAT, they (Revenue) are going to keep it ? I dunno, minefield.

I suspect the clubs will get their refunds, easier for all concerned, albeit costly for Revenue. If Angela hears of this she won't be happy !!

Societies will be the killer for them. Any club getting a refund "should" have every society beating their door down.

Russman

bustercherry wrote: »

Societies will be the killer for them. Any club getting a refund "should" have every society beating their door down.

Possibly, but I doubt it in practical terms. If a VAT invoice wasn't issued they arguably can't prove they paid VAT to the club. I don't know if there's any precedent of a customer or Joe Public being able to reclaim anything from a company that made an incorrect VAT charge or filing.

I'm trying to imagine what would happen if a court rules that charging VAT on some everyday item you could buy in Tesco had been "illegal" for 4 years, could individual customers claim VAT back from Tesco for being overcharged for baked beans ?

Wichita Lineman

Very interesting. While it's usually specified that VAT is included in your green fee I would guess that most clubs didnt put up their green fees by the VAT amount so I dont think the paying public have been overcharged in this instance.

A busy few days soon for Club Treasurers and / or Accountants coming early in the New Year I'd say.

tax_tutor1

Some clarification on this issue for users.
The EU has final say on all Vat matters as Vat is an European imposed tax. Any country joining the EU must implement a Vat system which must comply with the General EU Vat rules, referred to as directives.
The EU ruling on Vat being charged by private members clubs (only) went through the UK tax appeals system first then was appealed to European Court of Justice who gave a ruling which is then referred back to UK for implementation.
It will have tax implications for any European country whose vat rules on green fees are similar to UK i.e. Ireland.

The Irish Revenue have stated that they have noted the EU ruling and are considering the matter. They have also stated that any Irish members club looking for a Vat refund based on this ruling would need to submit detailed figures supporting their claim.

The issue of refunds is complicated by the Vat that these clubs also claimed on their costs. The % of Vat claimed back on all costs is based on formula or apportionment
Income liable to Vat/(all income -Vatable and non Vatable)= % reclaimed

Non Vatable income would include membership subscriptions etc.

If the % above changes the clubs would have over-claimed on their Vat purchases which will reduce any refund due for the Vat incorrectly charged on their Green fee income.

Key point is that members clubs should reduce their green fee rates for 2014 as they will no longer have to charge the 9% Vat rate on them!! Society will need to ask for the reduction as clubs are unlikely to volunteer it!

saintastic

Is there any implication that the vat rate reduction is for "member owned clubs"? I would have thought that the majority of clubs are owned by a company and not the members? I am comletely open to correction on this.

For example, if a PLC own the golf club and they have been receiving the revenue from green fees, would that club be deemed a "member owned club"?

superhooper

saintastic wrote: »

For example, if a PLC own the golf club and they have been receiving the revenue from green fees, would that club be deemed a "member owned club"?

I would think a PLC would not come in under the term "member owned club" as it is a for-profit organisation where effectively profits(if any) can be taken out of the company for distribution to the owners/shareholders.

saintastic

superhooper wrote: »

I would think a PLC would not come in under the term "member owned club" as it is a for-profit organisation where effectively profits(if any) can be taken out of the company for distribution to the owners/shareholders.

And would this be the norm for clubs in Ireland? I would have though maybe the older clubs like Portmarnock, Royal Dublin and The Hermitage might be member owned clubs but the newer clubs e.g. Carton House would be for-profit organisations?

tax_tutor1

saintastic wrote: »

Is there any implication that the vat rate reduction is for "member owned clubs"? I would have thought that the majority of clubs are owned by a company and not the members? I am comletely open to correction on this.

For example, if a PLC own the golf club and they have been receiving the revenue from green fees, would that club be deemed a "member owned club"?

The majority of golf clubs in Ireland are member owned,not for profit clubs. Some of the newer clubs, Carton House, Fota, Doonbeg etc. are not and are required to charge Vat on their membership fees and on their green fee income.

A PLC is a public limited company with a minimum value of share capital contributed by its shareholders (50,000) and would not qualify as a not for profit entity. It can offer it shares to the public.