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HMRC internal manual

Business Income Manual

HM Revenue & Customs
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Meaning of trade: mutual trading and members clubs: members' clubs: classes of club membership

The rules of a members club may provide for restricted categories of membership. For example, junior members may have rights falling short of the rights of full members to hold office or vote at meetings. If the restricted members’ subscriptions:

  • are fixed at a lower rate than the subscriptions of full members, and
  • are not intended to subsidise full members,

you may accept that they are not trading income.

Normally no liability arises where a member pays for their personal guests, even though these may be described as ‘visitors’ fees’. A personal guest would be one where the member bore the costs of the guest visiting the club. A ‘guest’ who had to pay their own way should be treated as any other ‘visitor’ - the income arising should be brought into account in computing the club’s trade profit.

Many clubs allow visitors or temporary members to use their facilities on payment of a commercial fee. You should treat such receipts as taxable trading receipts of the club - see BIM24225 to BIM24240. This applies both to individuals who simply arrive at a club to use its facilities on a casual basis and to groups who may book such use in advance.

The description of such visitors as ‘temporary’ members of the club (for example, temporary membership to a golf club may form part of a holiday package) does not prevent receipts from being taxable. Similar receipts from ‘associate’ members for their use of the club’s facilities is also trading income unless it can be shown that their rights are equivalent to those of full members. (These rights (might) include the right to vote at meetings, participate in club activities and generally to exercise control over the running of the club).

The expenses incurred in earning the fee income are deductible in computing assessable profits. The deduction extends to the appropriate proportion of the club’s overhead expenses. For example, in the case of golf clubs, a reasonable proportion of the course overheads may be deducted.

You should also quantify other incidental trading receipts, such as non-member catering income, in worthwhile cases.