Tax

Bridport and West Dorset Golf Club Ltd v Revenue and Customs Commissioners: Court of Justice of the European Union (Fifth Chamber): 19 December 2013

Bridport (the taxpayer) was a private golf club, the objects of which included the maintenance and management of the golf club for the use and accommodation of its members and visitors, as well as, inter alia, the running of a golf school and the provision of golf instructors and equipment.

In September 2009, approximately half of taxpayer’s 737 members were full members with access to the club’s course allowing them to play at any time, seven days per week, for a standard annual fee of £657.20. It was also possible for visiting non-members to play on the course on payment of an access charge (green fee) of £32 to £38 per round, or a higher rate per day. The prices of the annual subscriptions and the green fees had been set by the taxpayer taking into account the prices charged by neighbouring non-profit-making clubs and also by one commercial golf course operator.

For the financial year ending on 30 September 2009, the income from green fees represented 18.7% of the taxpayer’s income and annual subscriptions from members 56.4%, the balance coming largely from the operation of the bar. Having, for several years, accounted for and paid to the Revenue and Customs Commissioners (the Revenue) VAT on its green fee income, the taxpayer brought a claim, relying on Canterbury Hockey Club and Canterbury Ladies Hockey Club: Case C‑253/07 [2008] ECR I‑7821, for reimbursement of the amount of VAT overpaid, which it calculated to be £140,359.16. Following the Revenue’s rejection of that claim, the taxpayer appealed against that rejection to the First-tier Tribunal (Tax Chamber) (the FTT).

The FTT allowed the appeal, holding that there was no difference in the right to play golf on the taxpayer’s course whether that right had been granted to members of the club or to non-members paying the green fees and that those fees had been exempt from VAT under Directive (EC) 2006/112 (on the common system of value added tax) (the directive). The Revenue appealed against that judgment to the Upper Tribunal (Tax and Chancery Chamber) (the tribunal). According to the tribunal, it was not in dispute that taxpayer was a non-profit-making organisation as referred to in article 132(1)(m) of the directive. It was also not in dispute that the supply consisting of granting visiting non-members the right to use the golf course was closely linked to sport, that it was provided to persons taking part in sport and that it was essential to the transactions exempted, as referred to in article 134(a) of the directive.

The dispute in the main proceedings thus essentially concerned whether, in those circumstances, it was lawful to exclude that supply from the exemption at issue on the basis of article 134(b) or article 133(d) of the directive. In those circumstances, the tribunal decided to stay the proceedings and to refer certain questions to the Court of Justice of the European Union (the court) for a preliminary ruling.

By its first five questions, which it was appropriate to examine together, the referring court asked, in essence, whether article 134(b) of the directive should be interpreted as excluding from the exemption in article 132(1)(m) of that directive a supply of services consisting in the grant, by a non-profit-making body managing a golf course and offering a membership scheme, of the right to use that golf course to visiting non-members of that body. By questions 6 and 7 which it was appropriate to examine together, the referring court asked, in essence, whether article 133(d) of the directive should be interpreted as allowing the member states to exclude from the exemption in article 132(1)(m) of that directive a supply of services consisting in the grant of the right to use the golf course managed by a non-profit-making body offering a membership scheme when that supply was provided to visiting non-members of that body.

The court ruled: (1) Article 134(b) of the directive should be interpreted as not excluding from the exemption in article 132(1)(m) of that directive a supply of services consisting in the grant, by a non-profit-making body managing a golf course and offering a membership scheme, of the right to use that golf course to visiting non-members of that body (see [32] of the judgment).

(2) National legislation such as that at issue in the main proceedings did not comply with those limits on the power conferred by article 133(d) of the directive. That legislation was not limited to preventing distortions of competition stemming from the conditions under which, in accordance with the national legislation implementing that directive, the exemption was to be granted, but resulted in the difference in the conditions of competition stemming from the very existence of the exemption in article 132(1)(m) of the directive being called in question.

The exclusion from that exemption was made on the basis of the status of the recipient of the supply of the service in question even though that status did not alter the substance of the supply, namely, the grant of access to the golf course in order to play golf. Having regard to the foregoing considerations, article 133(d) of the directive should be interpreted as not allowing the member states, in circumstances such as those in the main proceedings, to exclude from the exemption in article 132(1)(m) of that directive a supply of services consisting in the grant of the right to use the golf course managed by a non-profit-making body offering a membership scheme when that supply was provided to visiting non-members of that body (see [38], [39] of the judgment).