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VAT Refunds -Should you register?

10.37am 20th March 2009 - Management Topics - This story was updated on Friday, April 9th, 2010

A personal view from Colin Jenkins, a PGA professional and golf centre operator. Colin is the Chairman of the Organisation of Golf Range Owners (OGRO). This is a summary of his presentation at the OGRO Conference, which was held last Thursday at The Ramada Hotel Maidstone.

Unusually, I love paying VAT – ask my wife (who doesn’t) – I like it because it’s a fair tax that we all have to pay and it shows that we are making a profit. But I hate overpaying for anything and there is just a chance that there are many people in the golf industry who may have paid £1000’s of pounds of VAT wrongly and are now, if they register in time, able to apply for a refund.

Background
The whole VAT issue is profoundly unfair, with different rules for different types of sports clubs. In golf it seems to be that a private members club, which may well have a very exclusive membership, can duck (legally) all kinds of tax especially VAT, Corporation tax and lower rates.

Meanwhile the pay and play facilities and open access golf ranges that welcome all are punished, because these are for the main part run by companies or individuals who operate commercially and seek to make a profit.

This ridiculous situation has arisen because successive governments have been unable to notice that exclusive, private members clubs are in reality operating as companies and distributing exclusive access to their course to a select few at well below the market rate – a sort of dividend.

In cricket, football, tennis, squash, running, and most other sports, each ‘club’ can welcome a new player and show them a route to start in the sport. At exclusive golf clubs, such a beginner is merely shown the door!

I love playing at these clubs and don’t wish to cause them problems, but it is true that they have an unfair advantage over golf businesses, which are truly focused on making the sport available to all.

With regard to VAT the EU has decided and had it written in its constitution that sport should have no VAT or a much lower rate for each member state.

This is good news, as in the long run as golf will probably end up with a lower rate of VAT. In the short term we are likely to see another round of catty squabbling as to what to do with VAT refunds in members clubs; perhaps less so in today’s climate, as all clubs will have to reduce debt.

The three year limitation period on VAT refund claims was introduced in 1997 by HM Revenue & Customs. As a result of eight years litigation by taxpayers against HM Revenue & Customs between 2000-08, the House of Lords has recently ruled that the three year limitation period was incorrectly introduced in 1997.

Who should register?
• PGA professionals who have taught and charged VAT on lessons.
• PGA professionals who have worked at members owned clubs and received a percentage of the green fee income as part of their remuneration.
• Members owned clubs that have charged VAT on green fees, but not on subscriptions.

All of the above categories are likely to have a good case.

Other savings may be won by golf businesses, which are set up for profit and charge VAT on membership, green fees and range usage. All of the above should probably register as they have little to lose, if they go with a no win, no fee specialist.

You can claim yourself, independently or using an agent.

Vatability will charge an upfront fee of £2,000 to fight the case for the proprietary sector and have some backing from the EGU.

KPMG and PKF are also prepared to work on a no win no fee basis as are VAT REFUNDS Ltd, whose principle, Chris Connor is confident that a considerable amount of VAT will be returned to golf businesses and professionals in the next few years.

The secret is to register as soon as possible, as this chance will be lost if registrations are not received before the end of March.

Chris O‘Connor at VAT REFUNDS on 0151 924 6813, 07596 998526, or vatrefunds@live.co.uk

OGRO www.ogro.org

       

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