In January 2014 we reported on the decision of the European Court of Justice (ECJ) in Bridport and West Dorset Golf Club Limited 1.

The ECJ held that an exemption from VAT for supplies of services closely linked to sport or physical education by non-profit organisations applies to the green fees paid by non-members of a golf club for supplies of such services. An exemption provided by Item 3 of Group 10

in Schedule 9 to the Value Added Tax Act 1994, which restricts this exemption to supplies to members, was therefore incompatible with EU law.

On 25 June 2014, HMRC published Revenue & Customs Brief 25/14. HMRC 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 concerned are closely linked and essential to sport and are made to persons taking part in sport.

HMRC confirms that legislation will be introduced by 1 January 2015 to reflect this, and any future changes in its policy will comply with the ECJ’s ruling in Bridport.

HMRC intends to deal in two phases with claims for the repayment of overpaid tax for previous periods:

  • Phase 1 – this will address the repayment claims where clubs decide to reimburse non-members who were incorrectly charged VAT on sporting services supplied to them. This phase will adopt the reimbursement arrangements explained in Sections 9 and 10 of Notice No. 700/45, “How to correct VAT errors and make adjustments or claims”.
  • Phase 2 – where clubs will not adopt reimbursement arrangements, HMRC is examining restricting such repayments to avoid unjust enrichment of the clubs. Further advice will be issued once a conclusion is reached.

To read Revenue & Customs Brief 25/14 click here

To read the ECJ’s judgment, click here