Chipping Sodbury Golf Club VAT Tribunal Case Synopsis

The UKGCOA is grateful to two of the prime movers behind the Chipping Sodbury VAT Tribunal hearing for their assessments of the recent hearing in Manchester. First of all, we hear from Fred Cowgill:“At long last we have had our day (or more precisely, days) in court. The Tribunal Case under the title of Chipping Sodbury Golf Club was heard in the Manchester Tribunal on the 28th May. It lasted 2 ½ days, as opposed to the 5 days originally planned.

The following is a short synopsis of the proceedings:

Mr Michael Sherry, Barrister of Middle Temple represented the golf clubs. Mr Raymond Hill, Barrister of Monkton Chambers, represented HMRC. Judge David Demack and Judge Cannan heard the case.

Mr Michael Sherry’s outlining of the legislative framework in respect of the VAT liability for sports organisations in his opening submissions was very helpful to the Tribunal. By reviewing the relevant cases, he was able to illustrate whether a supply consisting of various facets constituted a single or a multiple supply, and the required legal tests for determining how the VAT output tax was to be ascertained.

This approach enabled the evidence put by our witnesses to be put into context, which was clearly of assistance to Judges Cannan & Demack. HMRC produced no witnesses.

During HMRC’s submissions, it became clear that they did not fundamentally disagree with the position espoused by Mr Michael Sherry – either in respect of the question of apportionment or in respect of distortion of trade/ fiscal neutrality. It was clear that the strategy for taking the appeals of ‘not for profit’ clubs and proprietary clubs together worked and showed that the two arguments would have been more difficult to argue separately. It also showed a unity of purpose to achieve a fair result for all golf clubs.

While it is difficult to predict the Tribunal decision (which will not be published before the beginning of August), we remain optimistic although it must be stressed that that there may be a partial win or indeed total loss by the appellants”

As the Owner of Cold Ashby Golf Club, Northamptonshire, and as a member of the board of Directors of England Golf, David Croxton has been involved in the case for a long time. Here are his views on the hearing:

“It was over four years ago when Craig Wagstaff, Finance Director of the EGU and myself met with VAT Consultant Fred Cowgill to discuss the VAT problems affecting golf club membership subscriptions and the inequality in the taxation system for proprietary clubs compared with not for profit clubs. Our aim was to eventually achieve a fair system for all clubs.

At that time a couple of clubs had agreed locally with their VAT office that a golf club subscription could be treated as a multiple supply not a single item. We agreed that, by pursuing a claim using this principle and Chipping Sodbury as the lead club, we could get all the issues raised. It was also important that as many clubs as possible could submit claims so that a large number of cases were “stayed behind” Chipping Sodbury. This eventually amounted to several hundred, and even clubs from other sports have joined in. Because of the importance of the case the EGU [now England Golf] agreed to underwrite a large proportion of the costs of preparing the detail of the case and the various claim and this has amounted to a six figure sum.

While it can be said that some problems were encountered along the way, eventual credit should go to Fred Cowgill and Chipping Sodbury, general manager, Bob Williams for seeing the whole process through to the Tribunal and beyond. The latter stages were, of course, considerably helped by sizeable donations from many Golf course owners thus ensuring expert representation at the Tribunal by a leading Barrister, Michael Sherry. This was a very important development.

It was hoped that at some stage, meaningful discussions could be held with HMRC in order to create a better taxation system. However it became apparent that their policy makers were not prepared to do this until [quote] “the Chipping Sodbury and Bridport tribunals have been concluded”. We now await that conclusion and the judges’ verdict. They will have to rule on the apportionment claims lodged by the various clubs and if the appeal is won, many of these clubs should be able to make reclaims of overpaid VAT.

Whatever the verdict, the fact is that we have had an opportunity to make a detailed presentation of the issues. My view is that this will ultimately result in positive changes for the future. The obvious outcome would be for the policy makers in the Treasury to sit down with sporting organisations to discuss changes to the rules for the benefit of all. England Golf are keen that this should happen and are now following up this objective. If concessions can be made for the sale of static caravans then surely some progress can be made for golf clubs.”

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