PRESS RELEASE 27thJune 2016 – WILL GETTING OUT OF EUROPE MEAN FAIR PLAY IN UK SPORT?
In 1993 the European VAT rules effectively demolished much of British sport – and golf in particular. Europe ruled that non-profit making organisations, i.e. old traditional clubs, would enjoy VAT exemption. Commercial sports clubs and centres had to add 17½% VAT. Many of us had responded to the R & A and Sports Council’s message with the need for 700 new golf courses. When the bombshell of VAT distortion dropped, 542 new golf courses had been developed in England and Wales or were in the process of development since 1985. Most had been developed by farmers encouraged to diversify or by family businesses or golf enthusiasts. In effect the VAT distortion wrecked those dreams. Many small golf businesses are hanging on by their fingertips awaiting change
The Association of Golf Course Owners, formed in 1993, has fought long and hard for fairness in VAT for golf and throughout sport. Our work has been recognised by Parliament. Still in 2015 European VAT is demolishing our game – ruling that the UK must exempt green fees and not just membership fees. They still believe that a member-owned golf club taking £1 million a year to subsidise membership fees – the judge’s finding not ours – is non-profit making and deserves its VAT exemption. The sports VAT exemption is supposed to be ‘in the public interest’. So why is it in the public interest for the member of a sports club to enjoy VAT exempt sport but for the man in the street to pay VAT at 20%? European VAT law does not permit a level playing field in sports.
European VAT law has also hit sport by stopping the UK having a zero rate for building sports facilities. It’s left small clubs, including some in golf, unable to afford the VAT on new clubhouses.
VAT is a European law and BREXIT should give new opportunity to stop the rot.
In 1999 the UK brought in the VAT Sports Order 1999. It was specifically to stop golf course owners hiring their courses to members’ sections to give them VAT exempt golf. It introduced the concept of ‘sports land’. If your club hires sports land – say a sports hall – to play sport it generally attracts VAT. But if you hire that sports hall for a flower show – guess what? There is no VAT – because the flower show isn’t sport. If the club hires a general purpose hall to play carpet bowls – well again there is no VAT, because the hall isn’t sports land. Unless the hall owns the mats; then there’s VAT! And if a club hires a swimming pool regularly enough this ‘series of lets’ makes it VAT exempt. But hire it twice a year for a swimming gala and there’s VAT. Confused? So are the Treasury and HMRC. And it’s all about stopping golf course owners. We have been powerless to get this piece of legislation – which experts agree is unlawful – overturned in our courts or by Europe. AGCO has a case before Europe and an application for a judicial review of a UK judge’s decision in hand. We pressing on!
The UK Government has repeatedly said that Europe envisages VAT distortionbetween those who play at non-profit making members’ clubs and those who play at commercial sports facilities. Golf’s governing bodies have embraced this distortion, often seeing those who developed commercial golf facilities as ‘not quite nice’. Seen in context just ten, affordable, traditional new golf clubs emerged post war – the last in 1964. Almost all golf development has been by small businesses and golf enthusiasts, all demolished by VAT, and AGCO deserves full support for its tireless 23 years work – not opposition from those who want to keep the status quo and maintain the VAT and tax distortion.
Now following the BREXIT vote there is no excuse for envisaging distortion between one sports player and another. AGCO will continue to work to bring fairness to all sport. We are meeting the Treasury – at their invitation – on 29th June and will continue to push forward to a FAIRER TAX SYSTEM for everyone in sport. That’s VAT, corporation tax and business rates. Vivien Saunders