Golf Courses: VAT Liability (Hansard, 29 January 1997)

§ The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)
My Lords, green fees payable by visitors to both private and public golf courses are liable to VAT.

§ Lord Taylor of Blackburn
My Lords, I am grateful to the Minister for his very precise Answer. However, is he aware that it is not the sort of answer I expected? I thought he would tell the House, because of the way in which the Government emphasise the use of playing fields and sporting facilities, that he was encouraging the establishment of like schemes for all the golfing fraternity. That is not the case. If a youngster needs encouragement to play golf and goes to a municipal golf course, he is charged VAT; if he becomes a member of a club he is not charged VAT. There is a difficulty. In view of the consultative document that was circulated, will the Minister re-examine the matter and look more favourably on those who actively take part in sport, in line with government policy?

§ Lord Mackay of Ardbrecknish
My Lords, I am pleased that I surprised the noble Lord with my Answer. I think that his problem arises from the subscriptions paid to clubs where there is indeed a difference. Local authority courses pay VAT; indeed, I understand they are content with that situation. Non-profit-making golf courses pay no VAT; profit-making commercial courses pay VAT. I confirm that the position regarding VAT on sport, as the noble Lord rightly said, is the subject of a public consultation exercise which finished at the end of the year as part of a deregulatory review of VAT law on exemptions for sport. We are currently considering the responses to that consultation.

§ Lord Taylor of Gryfe
My Lords, I declare an interest as a member of three golf clubs and a resident of St. Andrews. Golf is the only industry in that town. While there are anomalies, as described by the noble Lord, Lord Taylor of Blackburn, that represents no impediment to those who want to play golf. Last year, in Scotland alone, 9.8 million rounds of golf were played, 22 per cent. of them by visitors. The Links Trust of St. Andrews, which has responsibility for the most famous golf courses in the world, took over £2 million in green fees and charged no VAT whatever on visiting players, whose contributions represented 85 per cent. of green fees paid.

§ Lord Mackay of Ardbrecknish
My Lords, first, on behalf of the Treasury, I wish to thank the noble Lord, Lord Taylor of Gryfe, for his contribution to the VAT income from the three golf courses of which he is a member. I also congratulate him on the amount of golf he plays and the famous course on which he is privileged to do so. The position on a course like St. Andrews is, I presume, that it counts as a non-profit-making course and therefore its subscriptions are not liable to VAT. I am not entirely sure why the green fees charged to visitors are not liable to VAT. Perhaps the noble Lord ought not to have raised the point in case some friendly VAT-man reads these proceedings. However, I am pleased to hear that nearly 10 million rounds of golf were played in Scotland last year. I put in a plug for it as a country with excellent golf courses.

§ Lord Beloff
My Lords, does the Minister agree that the noble Lord, Lord Taylor of Gryfe, is highly unfair to the town of St. Andrews? Its major industry is the University of St. Andrews of which I have the pleasure of being an honorary professor. To revert to the supplementary question, does the Minister further agree that for young people more active team games should be encouraged rather than a game which is more suited to people of the noble Lord's age?

§ Lord Mackay of Ardbrecknish
My Lords, I suspected that someone connected with the University of St. Andrews would take exception to the description by the noble Lord, Lord Taylor of Gryfe, of golf being the only industry in St. Andrews. I am not sure that "industry" is quite the right word. There are two famous undertakings in the town. One is golf, the other is the university.
As regards encouraging young people to take up golf, I do not normally answer questions about sport as I am not the most sporting person in your Lordships' House. However, it is good for young people to take up any kind of sport because it gives them a meaningful activity, something to do in their spare time. The great advantage of golf is that if you take it up young, you can carry it on into old age. I suspect that if I took up golf now I would not be good at it.

§ Lord Monkswell
My Lords, I do not play golf and have no interest in it, but I have an interest in good local government and the provision of facilities for the local community. Could the VAT regulations be reinterpreted so that everyone living in a local authority area was considered to be a member of the municipal golf club? If the golf course were run as part of the leisure services department rather than as a trading enterprise by the local authority, it would not be a profitable organisation and therefore would not be liable for VAT.

§ Lord Mackay of Ardbrecknish
My Lords, I do not think that many local authorities would be attracted by that proposition, if they are telling the truth. They keep saying that they are pressed for money. Clearly, to give everyone free golf would be a considerable additional expense and I doubt whether they would wish to 1134 undertake it. As regards VAT, the reason local authorities are content with the present arrangements is that if they were not registered for VAT they would not be able to recover it on the purchases they make relating to their sporting interests.

§ The Duke of Roxburghe
My Lords, I need to declare an interest. I own a golf course, so perhaps my interest is rather more intense. In light of the recent consultation paper on VAT and sport, can the Minister say whether the Government will consider any changes to level the playing field between the members' courses, the members' clubs and the proprietary clubs? Perhaps I may widen the question: will the Government consider extending the exemption to other sporting activities besides golf?

§ Lord Mackay of Ardbrecknish
My Lords, I wondered how soon we would arrive at level playing fields and the like. My noble friend is right to point out that commercial golf clubs are liable for VAT on their subscriptions as well as, like the others, on their green fees. That is part of the review. It seems highly unlikely that visitors' green fees charged by any one of the three categories will be excused VAT; they are more likely to remain liable to it. There is a difference between non-profit-making organisations. At the risk of bringing other noble Lords to their feet, one of the issues involved is the EC sixth VAT directive which requires exemption of certain services supplied by non-profit-making organisations to persons taking part in sport. That is another part of this complex problem.

§ Lord Eatwell
My Lords, is the Minister aware that his Answer to my noble friend Lord Taylor of Blackburn surprised me too? That is because the Minister appeared to be making a statement contrary to government policy as set out by the Chancellor of the Exchequer. Is he aware that in the Budget speech of 1993 the Chancellor said that he had never disguised a personal view that the coverage of value added tax in this country was too narrow? Offered the opportunity to extend value added tax, the noble Lord turns it down. Does he agree with the Chancellor of the Exchequer that coverage is too narrow? To what goods and services would he like to extend VAT?

§ Lord Mackay of Ardbrecknish
My Lords, it is clear that the noble Lord, Lord Eatwell, is not a golfer. That shot is not just into the rough; it is out of bounds as regards the Question. If he wants a discussion about the wider issues I suggest he puts down a Question.