3 Mins
The VAT advisory team at Henderson Loggie have a strong track record advising Members’ Golf Clubs throughout Scotland, and with some of the very best courses and facilities in the world, the sector remains a key component of our economy and tourism industry.
Despite this, the VAT profile of members’ golf clubs is often fraught with complexity, and following a number of recent enquiries we have set out below an outline of some of the main VAT considerations that clubs should be aware of, and how early planning can offer significant benefits to the club/organisation.
VAT Treatment for Members’ Golf Clubs
The VAT landscape for Members’ Golf Clubs has been subject to much scrutiny in recent years, particularly following the Bridport & West Dorset Golf Club case, where the Courts decided that VAT exemption could apply to visitor green fees (as well as for membership subscriptions). Other club income streams, including catering, retail, and corporate group rounds of golf are typically subject to VAT at the standard rate.
The result of this mixture of exempt and taxable income is that golf clubs have a relatively complex VAT profile, which requires the use of a ‘partial exemption’ method (either the standard income-based method or a special method if agreed with HMRC) to calculate the level of input tax which is recoverable on associated costs.
Capital Expenditure
Whilst partial exemption methods tend to be relatively ‘mechanical’ in their operation following initial implementation, there can be much value in appointing a specialist VAT advisor in instances where the club intends to undertake significant capital expenditure on course redevelopment works, or clubhouse extensions and refurbishments.
The benefit is that planning can be undertaken at an early stage to determine if a Partial Exemption Special Method would be of benefit to the club and whether other VAT considerations such as the ‘Option to Tax’ would provide a more favourable VAT-profile based on the intended use of the capital asset.
Capital Goods Scheme
There are also additional compliance aspects to consider if the capital spend exceeds £250,000 (net of VAT), as the taxable use of the asset needs to be ‘measured’ over a 10-year period, with adjustments to the initial input VAT recovery being due each year where appropriate.
Impact of Covid
Typically, supplies of golf rounds were severely restricted during COVID lockdowns and HMRC helpfully made it clear that they would look sympathetically at applications to use special methods to establish recovery of VAT on costs which do not directly use actual income during lockdown periods. This facility is still available to apply retrospectively and we have advised widely on special methods to ensure clients benefit fully.
How Can We Help?
Whether you are planning a capital spend and need specialist advice, or you are simply looking for comfort that your current VAT compliance process is meeting HMRC requirements, our team can help.
We regularly advise on capital projects, and partial exemption special methods, as well as offering a ‘VAT checklist’ health check service, which enables us to scope out both areas of potential weakness, and opportunities for VAT savings. This process identified a 6 figure reclaim opportunity for one client last year, and it is likely that there are other clubs that will be in a similar position.
Testimonial
“The VAT team at Henderson Loggie have provided excellent support, both in terms of routine partial exemption/VAT return compliance, and bespoke VAT advice in cases of complexity. The communication is prompt and clear, enabling us to identify opportunities early, and navigate our compliance requirements with confidence.“
Royal Burgess Golfing Society of Edinburgh