Summary

A golf course was an asset of a golf and country club partnership, rather than of the partners individually, at the time the partnership made an election to waive exemption from VAT in respect of land. Consequently, it was liable to account for VAT on rental income received in respect of the course.

Facts

The court was required to determine the preliminary issue of whether a golf course was an asset of the appellant golf and country club partnership (W) when an election to waive exemption to VAT was made.

W was originally established by two partners (J and S). In June 1990, J registered W for VAT and made an election to waive exemption under the Value Added Tax Act 1983 Sch.6A para.2 in respect of land. J's and S's sons (T and R) became partners in late 1990, and in February 1991 the four partners entered into a partnership agreement and a deed of gift by which J and S conveyed the golf course to themselves, T and R in equal shares. J subsequently retired and in October 2000 S, T and R "trading as" W granted a tenancy over the golf course to a non-profit making body (X), which was later replaced by a lease. W's accounts for the year ending 2001 showed rental income from the tenancy and lease but W did not account for VAT on the rents. The respondent commissioners decided that W had made VAT chargeable supplies of the golf course to X under the tenancy and lease and issued assessments for VAT.

W submitted that it could not have made any supplies of the golf course as the golf course was never its asset; it was always owned personally by the individual partners.

Held

The question of whether a particular asset was W's property, where there was no express agreement, was a highly fact sensitive issue. No single test was conclusive. All of the evidence had to be looked at to determine whether the partners intended the golf course to be an asset of W rather than their individual property. It was easiest to ascertain their intention by looking first at the grants of the tenancy and lease in 2000 and working backwards. The landlord description of S, T and R "trading as" W and the inclusion of rental income in W's accounts showed that S, T and R held the golf course as partners and regarded it as W's asset in 2000. The golf course was also W's asset between 1991 and 2000 as there was no evidence of any change in ownership of the golf course between the deed of gift and the grant of the tenancy and lease. The deed of gift and partnership agreement, signed on the same day by the same parties, were intended to confirm the four partners with effect from 1990, with each having equal shares in the golf course that they contributed to W. That transfer for no consideration of a share of the golf course to T and R which was equal to their share in W strongly suggested that the golf course was an asset of W between 1990 and February 1991. The partners regarded and used the golf course as W's asset. On the balance of probabilities, the golf course was, therefore, W's asset in June 1990 when the election was made, and at all times up to and including the grant of tenancy and lease in 2000. Accordingly, W was liable to account for VAT on the supplies of the golf course to X (see paras 5, 39-41, 43-44 of judgment).

Preliminary issue determined