Revenue studying VAT refunds but warns of curbs on "unjust enrichment of a claimant"

VAT on green fees paid over the last four years by member-owned golf clubs may be refunded by Revenue.

The Revenue Commissioners have made an official pronouncement on the issue of VAT refunds to member owned clubs Irish golf clubs following the recent European Court of Justice (CJEU) decision in favour of Bridport & West Dorset Golf Club Limited.

Yes, refunds will be forthcoming, but there may not be an avalanche of millions as "the VAT Consolidation Act specifies circumstances in which a refund of an overpaid amount may result in the unjust enrichment of a claimant."

See the full Revenue statement here (Thanks to reader Richie for the heads up)

The question before the CJEU was whether the supply of golf facilities by non-profit making clubs to visitors could also benefit from this exemption. The CJEU found that green fees received by non-profit making organisations from non-members could benefit from the Article 132.1(m) exemption [on VAT].

Explaining the implications for Ireland, the Revenue Commissioners state:

Green fees charged by non-profit making organisations, such as member owned clubs, to visitors have to date been liable to VAT at the second reduced rate of 9%. Revenue accepts that as a consequence of the recent CJEU decision (C-495/12), green fees charged by member owned clubs to non-members should be treated as exempt from VAT.

While the Value-Added Tax Consolidation Act 2010 (VATCA) provides for taxation of green fees by member-owned golf clubs, the clubs concerned may treat non-member green fees, including the green fee element of competition fees, as exempt from VAT with effect from 1 January 2014. The legislation will be amended at the next available opportunity. Member-owned clubs whose non-member green fees are exempt will no longer have an entitlement to a credit for VAT incurred on their inputs in relation to such fees and input credits related to such fees should be adjusted accordingly.

Backdating claims for four years could lean to huge pay-offs for the clubs that massive green fee income. But it appears that the Revenue is going to be strict and "consider whether the refund would unjustly enrich the club."

VAT by its nature is a tax on consumption: the consumers in the current context are the persons who paid the VAT-inclusive green fees. The VAT Consolidation Act specifies circumstances in which a refund of an overpaid amount may result in the unjust enrichment of a claimant. The circumstances include the extent to which the overpaid amount was, for practical purposes, passed on by the claimant to other persons in the price charged. Revenue has met with the Golfing Union of Ireland (GUI) as part of this examination and will consult further with the GUI before issuing guidance on the position for 2013 and earlier years.