Even the posh golf clubs are into corporate tax avoidance

It is reported that even the smartest member-owned golf clubs such as Royal Birkdale and Royal Lytham & St. Annes, though set up as non-profit-making organisations, have been earning a bob or two on the quiet – £2.5bn to be precise – and not paying tax on it.

They do a huge trade in visitor fee income, but then pass it off as members’ guest fees which are non-taxable. This contravenes the law on the taxation of visitor fee income which has been in place since the case of Carlisle and Silloth golf club in 1912-13 and is recited by HMRC though for some reason they do not enforce it.

Sunningdale golf club for example took over £1.3m in visitors’ fees, but hid them as members’ guest fees. The Berkshire has taken £12.4m in visitors’ fees since 1994 and never paid tax. Swinley Forest took £499,000 in taxable visitors’ fees in 2011, but concealed then as non-taxable members’ guest fees and paid no tax, withthe accounts signed off by the club chairman Sir Hugh Stevenson, former director of the FSA.

Altogether since 1990 UK member-owned golf clubs have taken some £2.5 billion in visitors’ fees and avoided corporation tax. It further rubs salt into the wound that member-owned golf clubs don’t charge VAT on their membership fees, yet proprietary golf clubs do have to add VAT. The latter includes all the small businesses set up in the 1980-90s to satisfy the demand for golf and to diversify from farming.

This is in fact the jeans and T-shirt brigade, distinctly the poorer half of the population, yet they get taxed while the elite escapes. There are parallels to this too in other areas of sport, for example the man in the street pays VAT on his fees to play snooker or use the gym, while the members of MCC and Queen’s don’t.

There are outstanding legal judgements on this issue. There was a finding in fact in a case called Chipping Sodbury 2012 in Manchester which stated there is a distortion over VAT payments in this matter, but the government declined to act on it. In addition the member-owned golf clubs that have fiddled their tax on £2.5bn of visitors’ fees are now actually claiming back £300m on that same money – back to 1st January 1990. The case is known as Bridport and West Dorset, and goes to the European Court of Justice this year, with KPMG on a no-win, no-fee basis standing potentially to make £60m – one might say utter greed all round.