The Association of Golf Course Owners – Abbotsley Golf Club – St. Neots PE19 6XN
Chairman: Vivien Saunders OBE PhD FCMI (Solicitor – retired)
Tel: 07956 628338 Email: www.agco.org.uk
Deputy Chairman: Andrew Sutcliffe. North Region: Peter Roberts. Northern Ireland: Kenny Logan.
South Region: Ross Noades
Fighting for fair VAT and tax in golf for 20 years
14th July 2013
KPMG – tax evasion at UK golf clubs and the disgraceful claim for refunds of VAT
Corporation tax is payable on visitors’ fees at golf clubs. It is all clearly recited in HMRC’s manuals. You take the visitors’ fees, deduct expenses based on the number of visitors’ rounds and pay your tax. Yes, you pay tax!
Golf clubs have systematically evaded tax on visitors’ fees by failing to declare them. Most just sweep the visitors’ fees into the members’ kitty as if they weren’t happening. By our calculation, supported by official reports and surveys, member owned clubs have taken some £2.5 billion in visitors’ fees since 1990 and routinely evaded tax on this. At many clubs the amounts are huge – some with over £1 million a year!
In the case of Bridport and West Dorset Golf Club Ltd v HMRC, with 457 other golf clubs standing behind them, these clubs are making a claim for a refund of some £80 million of VAT on the visitors’ fees on which almost all have systematically evaded corporation tax. The case has been referred by our courts to the European Court for a decision. The total VAT claim with other clubs and accountants jumping on board is around £300 million.
The case is being orchestrated by accountancy giants KPMG. So where do KPMG stand on corporation tax on visitors’ fees? It’s simple. KPMG promotes/condones/assists tax evasion and fraud at golf clubs. Here’s the proof!
KPMG acts, for example, for Clitheroe Golf Club and have been their auditors for over 20 years. Clitheroe Golf Club has a substantial trade for visitors’ fees and should pay tax. In 2010 their accounts show that they took £93,621 of visitors’ fees plus a further £37,561 in open competitions. That’s £130,000. It’s taxable. In 1996 Clitheroe’s visitors’ fees were £99,950. Let’s assume that’s some £2 million of visitors’ fees since 1990.
So what about tax? It’s simple. They have fiddled it and never paid tax on these fees. In every single year KPMG has recorded the following disgraceful and untrue statement in their company accounts:
“The company enjoys the status of an incorporated club and as such the liability to corporation tax only extends to investment income and chargeable gains.”
No KPMG. Tax is payable on trading with outsiders. You know it. This is tax evasion and tax fraud and prosecutions should follow. Presumably Clitheroe GC, like most, will now be claiming a refund of VAT back to 1990 on this £2 million odd, where KPMG have already overseen the tax evasion. Hopefully HMRC will now chase Clitheroe and every other member-owned club that has fiddled its corporation tax - right back to 1990. So what redress does Clitheroe have against KPMG? That’s an interesting one! Come clean Clitheroe and pay the tax KPMG has let you fiddle – plus the interest, plus the penalties. Now for those taking £1 million a year!
Thanks to KPMG almost all members’ clubs have made their claims for VAT refunds and told HMRC the level of their previously undisclosed visitors’ fees! It is a veritable can of worms. Clubs may succeed in the claims for refunds of VAT. But HMRC clearly now has a duty to recover the relevant corporation tax. The Taxpayers’ Charter doesn’t allow forgiveness or deals. We still say Margaret Hodge and the Public Accounts Committee should tackle this one. This isn’t Amazon or Starbucks but the UK’s largest firms of accountants assisting with one great, big tax fiddle! Let’s see what the Institute of Chartered Accountants says about this evasion!
But it isn’t just KPMG that’s at it. Here is what UHY Hacker Young says in the accounts of Coombe Hill Golf Club: “The company is not subject to corporation tax on its golfing and related club activities. Accordingly, provision for corporation tax is only made on any investment income received by the company”.
No, Hacker Young. They should be paying tax on their visitors’ fees - £95 a throw. Marc Waterman, the auditor from Hacker Young, is an 8 handicap golfer and a member of Moor Park. He knows Coombe Hill is running a business that is taxable. Yes, Marc. Yes, Hacker Young. It is taxable. Read your HMRC manual. CHGC – pay up!
But Moor Park – well there’s another one hiding visitors’ fees – this time as “ground income”. And their accountants are Hillier Hopkins. You know – the ones where partner Robert Twydle acts for 30 golf clubs and claims that their clients don’t pay corporation tax. Clubs that Hillier Hopkins act for include Ellesborough where the Prime Minister is an honorary member. We have asked the Prime Minister’s office to check out how Hillier Hopkins portrays Ellesborough’s green fees. But they haven’t responded yet!
Then there is PKF – the accountants for England Golf. They also act for Notts Golf Club at Hollinwell. The club regularly takes over £200,000 in visitors’ fees – and you guess it. They never pay their tax. The old trick of hiding it all as “temporary memberships” and pretending it isn’t happening. But PKF were also Notts GC’s accountants when they registered for CASC (Community Amateur Sports Club) – saving the club 80% of their business rates. Notts (Hollinwell) is probably England’s most discriminatory club against women members so this was a fraudulent CASC registration. In 2004 they managed to get their business rate rebate and their rates dropped from £27,928 to £8,412. They had to de-register in 2007 (presumably having been rumbled) but didn’t repay the fiddled business rates.
In 2004 Notts GC had subs of just £327,000 and green fees of £180,000. Somehow PKF managed to persuade the taxman that they made a loss on green fees. Let’s say 1/10 of their rounds were visitors. Deduct one tenth of all the expenses and there was lots to pay tax on. Someone is cheating or the taxman is dealing deals behind the trolley shed or is very stupid indeed. Why flag up Notts? Well apart from the CASC scandal they had the same treasurer as England Golf for a time!
And of course PKF also act for Sunningdale, where with £1.3 million of visitors’ fees in 2011 the club managed not to pay any corporation tax on the “temporary members”!
And Sunningdale is part of that golden triangle in Ascot – Sunningdale, the Berkshire and Swinley Forest. Between the three clubs they took £5 million in green fees in the last two years – and guess what? Yes, you got it – no tax paid. The old “temporary membership” scam. Accountants, Arnold Hill, act for the Berkshire and Swinley. Swinley is a nice one. Former Deputy Chairman of the FSA, Sir Hugh Stevenson, is the Swinley Forest chairman and signed off the accounts. Sir Hugh was knighted for services to the financial industry so he knows his stuff. We asked Sir Hugh how Swinley could take £499,000 in green fees in 2011 and not pay tax; we thought he might be able to help the rest of us. He didn’t reply and in 2012 Swinley took £503,000 and no tax! The Berkshire has taken over £12 million of visitors’ fees in recent years, claims to make a loss on visitors and never pays tax. Easy to stop making that loss!! Don’t have visitors! Come on Arnold Hill – how are you doing it?
Then there are other large accountancy firms at the same game. There’s BDO LLP which is the fifth largest accountancy firm in the world. They act for Surrey gem – Hankley Common – where they record that the club took £238,251 in visitors’ fees and societies. Yes, you’ve guessed it. No tax. It’s all too farfetched!
Then the smaller firms are at it to. But if they take the lead from KPMG, who can be surprised? At Walton Heath, with the £600,000 of “temporary members” and the MPs getting their subsidised memberships it’s Tudor John of Epsom doing the accounts. And Walton Heath admits to asking for VAT back since 1990 on those “temporary memberships” on which tax just hasn’t been paid! Whoops! Which MPs benefit from this?
There’s Reeves and Co of Chatham acting for Royal Cinque Ports (Deal) and their lack of tax on £304,410 of temporary members a.k.a the visitors, pretending now they have a loss of £440,000 to carry forward. So it goes on and on… and on.
There’s Peters Elworthy & Moore in Cambridge – one of the UK’s top 60 accountancy firms. They act for Gog Magog Golf Club in Cambridge, a club that takes over £160,000 in visitors’ fees each year and even advertises holidays with Your Golf Travel! They never pay any tax on it! That’s perhaps £3 million of visitors’ fees since 1990. The Gogs is the club for the Great and Good of Cambridge. If tax becomes due it’s the members who’ll pay. It isn’t a limited company. Oh dear!
Now Sandiway in Cheshire – that’s an interesting one; only because it is the home of the chairman of England Golf. Their green fees are quite small fry. But their accounts for 2011 are simple. There is a heading – subscriptions and then 2 subsections. One is members, with £541,716, and then temporary members of £84,936. No they aren’t temporary members. They are visitors; taxable visitors. Their accountants are Murray Smith LLP of Northwich. They record: It has been agreed with the Inland Revenue that the club’s operations are run on a no profit no loss basis and accordingly corporation tax is only due on interest received.
Once again, the Inland Revenue is either extremely stupid or more likely the accountants have pretended all this money is paid for by members; the old “temporary membership” scam. Now let’s look at this further. Based on the green fee price at Sandiway of £55 to £70 they’d be doing just under 2,000 rounds of visitors’ golf against total rounds of say 35,000. Not many expenses to deduct there. The point is that they aren’t even trying. You cannot take £84,936 in visitors’ fees and think there is no tax.
But here’s the new scam. Sandiway’s Open competitions are all on line. First there is the Mixed Open – with 76 couples entered at £65. That’s £4,940. And then there’s the men’s event with 96 pairs entered at £50 a pair. That’s another £4,600. The scam here is that members’ clubs can turn a green fee into an open competition and make it VAT exempt. So it isn’t just the corporation tax, it’s the VAT too.
You see, clubs like Coombe Hill and Gog Magog and Sandiway and Swinley Forest don’t believe in paying tax. Just as they cheat the taxman they also cheat with their liquor licenses. These clubs all have what is called a Club Premises Certificate. That’s for members’ clubs where they can only serve themselves and their bona fide guests and the odd guest from other similar clubs. The Club Premises Certificate isn’t for these clubs with their huge businesses. So doubtless when the taxman goes tapping on their door or their accountants’ doors they just say – “Oh no, we are a members’ only club and all that money coming in is from members paying for their own guests”. Just as they cheat with the liquor license they cheat the taxman.
You see, golf is supposed to be an honourable game where we can play without umpires and referees. We call the rules on ourselves; we don’t kick the ball in the rough or cheat on our scores.
And yet when you look at it, golf is full of the biggest cheats in British sport. And let’s remember that these big clubs have been cheating the taxman and the general public for years – hiding their green fees as the jolly old “temporary memberships”- probably £2.5 billion of it since 1990 . It’s the disgraceful pretence that the member is paying for his chum and that visitors and societies don’t actually happen. It’s the Old Boy Network and Establishment at its worst.
Not satisfied with that they are then asking for a total refund of £300 million of VAT on the money on which they have already cheated the tax. Shocking. Absolutely shocking. The case goes to Europe soon and let’s hope Europe realises British golf is cheating!
The game of golf may be in difficulties for portraying itself as old fashioned and not allowing women or juniors at Muirfield. That’s not the real scandal of the game. The question we should ask Muirfield is how much they are taking on visitors’ fees and are they paying tax? That’s what Alex Salmond, Scotland’s First Minister should want to know. Maybe they are. Before we panic about women at Open Championship courses let’s get a very clear statement from every single Open Championship venue as to their green fee income over the last 20 years and how much tax they have paid. That’s Royal Birkdale, Royal Lytham, Royal Liverpool, Royal St. George’s, Royal Troon and the Honourable Company of Edinburgh Golfers at Muirfield.
We’d like a Select Committee in Parliament to tackle KPMG on their statements with Clitheroe and we would like them to ask Sir Hugh Stevenson why he thinks Swinley Forest shouldn’t pay tax on £503,000 of green fees paid by visitors. And perhaps Arnold Hill and Co can explain why the Berkshire Golf Club has never paid tax on £12 million of visitors’ fees. And who are the MPs who belong to Walton Heath, getting their discounted subs and being party to greedy claims for VAT on their huge, untaxed “temporary membership” fees!
The Association of Golf Course Owners (1993) – A company limited by guarantee. Registered in England and Wales.
Co. No. 8414445. Directors: RG Noades, VI Saunders OBE, AJ Sutcliffe