Royal County Down Golf Club
| Jurisdiction | UK Non-devolved |
| Judgment Date | 12 March 2021 |
| Neutral Citation | [2021] UKFTT 70 (TC) |
| Date | 12 March 2021 |
| Court | First Tier Tribunal (Tax Chamber) |
[2021] UKFTT 70 (TC)
Judge Richard Chapman QC
Value added tax – VATA 1994, s. 80 – Time limits – Whether or not a new claim or an amendment to a pre-existing claim – New claim – Whether or not the FTT has jurisdiction in respect of HMRC's care and management powers to waive the time limit – No – Whether or not a breach of Article 1 of Protocol 1 of the ECHR – No – Whether or not a breach of the principles of equivalence or effectiveness – No – Appeal dismissed.
[1] This appeal raises issues as to the operation of statutory time limits. It is common ground that a claim by Royal County Down Golf Club (“the Club”) for repayment of overpaid VAT was, if taken on its own, made outside the statutory time limit. The Club submits that the claim was in fact an amendment to a pre-existing claim and so is within time. In the alternative, the Club submits that, if it was not an amendment to a pre-existing clam, the operation of the statutory time limit should be disapplied in the circumstances of the present case. HMRC's position is that the claim is, and should remain, time-barred.
[2] I read witness statements from Dr Rosemary Peters Gallagher and Mr Ciaran McGee on behalf of the Club, both of whom were at the material times employed by the Club's external chartered accountants, Moore (NI) LLP (previously Moore Stephens (NI) LLP) (“Moore Stephens”). I also read a witness statement from Mr Trefor Jones on behalf of HMRC. Mr Jones was the decision making officer in this matter. Of the three witnesses, only Mr McGee gave oral evidence. He did so in a helpful and entirely credible manner. Dr Peters Gallagher and Mr Jones attended the hearing and verified their witness statements. However, Miss Jones and Mr Harvey took the helpful and constructive approach that there was no need for cross-examination of either of these two witnesses as the facts (as distinct from the application of those facts) were not in dispute.
[3] In the circumstances, I make the following findings of fact upon the basis of the witness evidence and the documents within the hearing bundle.
[4] As its name indicates, the Club is a golf club. In common with many other golf clubs, the Club charges green fees from non-members for the use of the Club's golf course. The Club historically accounted for VAT on green fees in accordance with HMRC's approach to such income and the prevailing view of the operation of the domestic legislation. This was upon the basis that the exemption for sporting services did not extend to supplies made to non-members of golf clubs.
[5] On 27 March 2009, the Club (through Moore Stephens) submitted a claim to HMRC for over-declared output tax on green fees in the sum of £492,167 in respect of the VAT periods 1 January 1990 to 4 December 1996 and 1 January 2006 to 31 December 2008 (“the 2009 Claim”). This was upon the basis that the European Court of Justice had recently given judgment in Canterbury Hockey Club v R & C Commrs (Case C-253/07) [2008] BVC 824 (“Canterbury Hockey”) relating to the scope of the sporting exemption (being the exemption from VAT for certain services linked to sport supplied to persons taking part in sport provided by article 13(A)(1)(m) of the Sixth Directive). It was the Club's view (in common with various other golf clubs) that the sporting exemption should be extended to visiting players. The period between 1990 and 1996 was therefore a JP Morgan Fleming Claverhouse Investment Trust plc v R & C Commrs (Case C-363/05) [2010] BVC 337 claim and the period between 2006 and 2008 was a voluntary disclosure within the usual time limits. Given the significance of this letter, I set out its substance as follows:
On behalf of the above client we hereby submit a claim under the terms of Business Brief 07/08 and s80 VATA 1994 in respect of output tax overpaid (net of the related input VAT reduction) on green fee income for the period 1 January 1990 to 4 December 1996 and from 1 January 2006 to 31 December 2008.
This claim is based on the recent ruling given by the European Court of Justice in the recent case involving Canterbury Hockey Club v R & C Commrs (Case C-253/07) [2008] BVC 824 in which the court ruled that the expression “certain services closely related to sport” in article 13A(1)(m) of Sixth Directive 77/388 does not allow member states to limit the exemption under that provision by reference to the recipients of the services in question. As such we consider that the sporting exemption afforded to playing members of Royal Co Down Golf Club from 1 January 1990 should be extended to visiting players.
The amount of VAT involved in this claim totals £492,167. A summary of the claim is attached and detailed calculations are available for review at our Belfast office. The club also wishes to claim statutory interest (calculated on a compound basis) on the VAT currently being reclaimed.
[6] The Club also sought repayment of interest of VAT overpaid on membership subscriptions on a compound basis. This element of the claim is not in issue within the present appeal.
[7] On 26 August 2009, HMRC rejected the Club's claim. This was upon the basis of HMRC's view that Canterbury Hockey had no impact upon VAT on green fees as the sporting exemption did not (on HMRC's case at that time) extend to supplies to non-members.
[8] The Club requested a review on 24 September 2019. Moore Stephens disputed HMRC's interpretation of the Principal VAT Directive, maintained that the sporting exemption also applied to supplies made by non-profit making sports clubs to non-members, and suggested that the review period be extended to allow for the resolution of likely litigation involving other golf clubs on the same matter.
[9] This resulted in a letter from HMRC dated 6 November 2009 upholding the decision. The review decision included the following conclusion:
The Canterbury Hockey case considered whether the term “person” should be restricted to individuals actually playing the sport or should be extended to other legal entities, such as corporate bodies. The Court's ruling was that because article 13 does not restrict the sporting exemption to any particular category of recipient the exemption cannot be restricted to any particular legal entity.
It is HM Revenue & Customs view that the ruling in Canterbury Hockey has no bearing on the fact that greens fees are consideration for a taxable supply rather than exempt supply. As article 13(A)(2)(b) has direct effect the UK is obliged make legal provision to exclude from exemption supplies made to obtain additional income which are in direct competition with commercial enterprises.
HM Revenue & Customs consider green fees are taxable because they are for the purpose of obtaining additional income and are in direct competition with commercial enterprises, not because they are charged to non-members. The decision is based on the nature of the supply and not the nature of recipient, i.e. a natural person or an organisation.
[10] The Club appealed against HMRC's decision in 2010 with the appeal reference TC/2010/00896 (“the 2010 Appeal”). The 2010 Appeal was stood behind an appeal brought by another golf club, Bridport and West Dorset Golf Club Ltd (“Bridport”). The First-tier Tribunal allowed Bridport's appeal in a decision released on 1 June 2011 and reported at [2011] TC 01214, (“Bridport FTT”). HMRC appealed Bridport FTT to the Upper Tribunal. In a decision released on 30 July 2012 and reported at [2012] BVC 1,758, the Upper Tribunal stayed the proceedings and referred a number of questions to the Court of Justice of the European Union (“the ECJ”) (“Bridport (UT)”). On 19 December 2013, the ECJ released its judgment in R & C Commrs v Bridport and West Dorset Golf Club Ltd (Case C-495/12) [2014] BVC 1 (“Bridport (ECJ)”). For present purposes, the significant finding within Bridport ECJ was that the United Kingdom's treatment of green fees paid by non-members was incompatible with the Principal VAT Directive and that such fees should be exempt from VAT. Legislation was duly introduced to reflect this.
[11] Throughout Bridport's litigation, the Club maintained its position that green fees paid by visiting non-members were exempt.
[12] On 22 April 2014, HMRC applied for a further stay of the 2010 Appeal until 18 July 2014 on the grounds that HMRC was considering a further defence against the appeal upon the basis of unjust enrichment. This extension was granted. On 24 July 2014, HMRC applied for a further stay until 28 January 2015 upon the same grounds. I have no evidence before me as to what happened to that application or the 2010 Appeal itself. However, as set out below, HMRC agreed to repay the sums claimed in the 2010 Appeal on 18 July 2018. I infer from this that the 2010 Appeal remained stayed and was either withdrawn or compromised after 18 July 2018. In any event, there is no suggestion that the 2010 Appeal is ongoing and I am not asked by either party to determine whether or not the sums claimed within the 2010 Appeal are or were owing.
[13] On 29 January 2015, Moore Stephens sought reclaims in respect of the periods from 1 January 2009 to 31 December 2013 (“the 2015 Claim”). The 2015 Claim provides as follows:
We enclose herewith a summary of VAT reclaim in the above case. Full workings may be inspected at our Coleraine offices, at the address shown above.
The reclaim is made in light of the ECJ's decision in the case of R & C Commrs v Bridport and West Dorset Golf Club Ltd (Case C-495/12) [2014] BVC 1, in which it was decided that the UK's treatment of green fees from non-members incompatible with the exemptions provided by the Principal VAT Directive.
You will note that the total amount to be claimed amounts to £746,429.
The Club also wishes to claim statutory interest on the amounts overpaid, calculated on a compound basis.
[14] Dr Peters...
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