HOW MEMBERS’ CLUBS FIDDLE THEIR TAX ON GREEN FEES – the AGCO CAMPAIGN
The Berkshire Golf Club has taken £16 million in visitors’ fees since 1990 and in every year say they make such a loss on green fees that they pay no tax. This is the tip of the iceberg – corruption and tax evasion supported by golf’s governing bodies. Read on. Our message to members’ clubs – IF YOU MAKE A LOSS – THEN STOP DOING IT!
Members’ golf clubs routinely fiddle their corporation tax. Corporation tax is payable on green fees. Simple tax rules mean that the expenses to offset against green fee income are those ‘wholly and exclusively’ used to obtain the income. The Association of Golf Course Owners has been fighting this since 1993. In 1995 the governing bodies of golf persuaded the Inland Revenue that the costs of running a golf course depend on the numbers of rounds of golf played. Professor Stefan Szymanski, the economist giving evidence for HMRC in the Bridport case, has now supported what AGCO says. There is virtually no extra cost in putting a green fee player on the golf course. If a club has, say, 4000 rounds of visitors’ golf in a year, that’s 100 a week throughout the 40 week season, i.e. 20 a day, an hour of starting times. And that doesn’t put up costs. And that’s about what most members’ clubs do. AGCO has campaigned for HMRC to allow a fixed rate of expenses of 5% against green fee income. The real cost is a scorecard and green fee ticket.
The extent of the tax evasion by members’ clubs is huge. The Berkshirehas taken £16 million of green fees since 1990 and in every year says they make such a loss on the green fees that they have never paid tax – their supposed losses being offset against rent and investments. Sunningdale’s accounts from 2011 show green fees of £1.5 million and the same scenario with no tax paid. It’s rife, it’s fraud, it’s criminal.
Notts Golf Club (Hollinwell) with green fees of £231,882, Littlestonewith £261,164 and Deal (Royal Cinque Ports) with £396,622, are typical of clubs reciting that their green fees make such a loss that they have vast losses to carry forward to future years – if and when they do get rumbled!
It isn’t clever accounting but clear fraud. Members’ clubs should show their income from visitors separately and then offset expenses against this clear income. Instead they invariably budget for this green fee income, shove it into the members’ kitty, realistically pretend it isn’t happening, spend it and then portray to the taxman that they are running at no profit or a loss. The green fees and all trading with outsiders should be shown as a separate account. That’s the law. Realistically a club like Littlestone should deduct about 10% of the running of the golf course against their green fees and pay tax on the rest. Many clubs fiddle their tax by pretending the visitors are guests of members paid for by members. If a member just pops more money in the kitty it wouldn’t be taxable. The captain of the Berkshirereported that 5,963 visitors had played as guests of the members, pretending members had paid for them, and the club, as always fiddled their tax on £850,000 of green fees. It’s clear fraud.
AGCO has a Freedom of Information case on-going to explain to HMRC and the courts just the extent of the members’ clubs green fees and their tax evasion. The simple question – “Of the 457 clubs standing behind Bridport in the VAT case, what was their total green fee income for 2013 and what was the total amount of corporation tax paid?” We bet that their total green fee income was some £60 million and hardly a penny in tax paid; because it’s fiddled and hidden. Remember, AGCO’s stance has always been that KPMG chose to fight the huge VAT case with Bridport and West Dorset Golf Club because they couldn’t find any other club actually paying corporation tax on green fees – and the judge would have smelt a rat if he saw other golf club accounts. KPMG couldn’t use their own clients – Clitheroe Golf Club – because of 20 years of tax evasion there!
AGCO continues with the fight to get members’ clubs to pay corporation tax. Hopefully as a result of their greedy claims for VAT refunds within Bridport, HMRC will see the light of day and claw back the evaded corporation tax. HMRC’s latest statement on Bridport suggests they will pounce! AGCO has a case in front of Europe saying that the forgiveness of corporation tax is a form of State Aid. Has HMRC turned a blind eye to the activities of clubs like the Berkshire because of corruption? HMRC says no. Has HMRC been guilty of gross incompetence and stupidity; HMRC suggests not. Has HMRC made a policy decision not to touch these members’ clubs? If so, we say it is State Aid and illegal. Sadly the UKGCOA won’t support AGCO in this. Littlestone Golf Club, although a members’ club, is a UKGCOA member and they, like England Golf, and KPMG who act for the UKGCOA, are keen to protect the interests of members’ clubs and sweep the tax evasion and corruption under the carpet!
The Finance Director of England Golf was, of course, treasurer of Notts (Hollinwell) for several years. He knows, England Golf knows, we know, HMRC knows, KPMG knows. The tax evasion in members’ clubs is a true disgrace and corrupt. Oh, and remember that KPMG also acted for FIFA. AGCO continues the fight! We challenge the UKGCOA to have the guts to support AGCO in this!
Attached for tax enthusiasts are the accounts of the Berkshire, Swinley Forest, Notts, Littlestone and Royal Cinque Ports. You can see the true scandal and tax fiddles for yourselves!
Vivien Saunders – November 8th 2015