Hotels group De Vere has warned shareholders it is likely to take a £9.3 million VAT hit in its accounts this year.

Shares in the group slipped four per cent after it said a tribunal ruling over VAT payments on golf and leisure subscription fees had gone against it.

The ruling, against which De Vere has 56 days to launch an appeal, could knock up to a quarter off its profits in the year to the end of September.

Analysts had been expecting pre-tax profits of between £37 and £40 million.

De Vere, which owns the Belfry golfcourse in Warwickshire and The Grand hotel in Brighton, said the dispute arose after a subsidiary treated golf and leisure subscription revenues as exempt from the tax between April 1997 and December 1999.

But in July 2000 Customs and Excise said the subscription income was liable for VAT worth £7 million plus interest.

De Vere has made a contingent provision in its accounts for the last three years.

The group said yesterday that the outcome of a tribunal which took place in December made it "likely" the assessment will now be payable but added it was considering whether to launch an appeal.

The group estimates the charge will come to £11.5 million including interest and costs but said a corporation tax credit would reduce the likely hit to £9.3 million.

Shares fell 13p to 300p.