At  the end of 2013, the European Court of Justice (ECJ) ruled that not-for-profit member-owned golf clubs in the UK did not have to levy VAT on the green fees charged to visitors in a case brought by Bridport and West Dorset Golf Club against HMRC.

Andy Dawbarn, VAT partner at Wilkins Kennedy, said: 'This is a breakthrough for both the golf clubs that took on HMRC, and those that have yet to put in a claim.  It could provide a welcome cash injection for those clubs that have seen their incomes hit by the recession Clubs that have not yet already put in a claim should do so now, as they may be eligible for VAT repayments on green fees dating back to February 2009.' 

HRMC will now be scrutinising the accounts of golf clubs to ascertain whether they bore the costs of the VAT themselves. Payouts will be distributed on the basis that a clubs’ green fees have been inclusive of VAT, which will be the case for most clubs.

Wilkins Kennedy says the final bill for HMRC could be even higher depending on the conclusion of a separate legal dispute  currently going through  the ECJ on the wider issue of whether HMRC has to pay compound interest on VAT that it had levied incorrectly.

Dawbarn said: 'In order to protect their position I advise clubs that have received repayments of this nature to ask for compound interest to be paid on their claims. Although they will only receive a simple interest payment in the first instance, this places them in the queue to benefit from a compound interest award should the current long-running litigation on this subject finally find in favour of the taxpayer.'