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HMRC internal manual

Business Income Manual

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Meaning of trade: mutual trading and members clubs: members’ clubs: Tax Bulletin article on temporary membership

The subject of temporary club membership was discussed in an article in Tax Bulletin 12, the text of which is now included below.

Temporary club membership

We have been asked whether non-proprietary members’ golf clubs are liable to tax on trading income such as visitors’ green fees. This article gives our views on when income received by members’ clubs for the use of their facilities by non-members is taxable trading income.

Any surplus arising to a members’ club from transactions with its members is not normally taxable. Payments by members in respect of their personal guests [see BIM24220 for interpretation of this term], even when these are described as `visitors’ fees’ are normally regarded as part of that surplus.

But receipts from visitors who, in return for payment on a commercial basis, are allowed to use a club’s facilities will be receipts from a taxable trade in the club’s hands. This applies to individuals who arrive at a club to use its facilities on a casual basis and to groups who may book in advance.

Such visitors may become ’temporary members’ of the club. But this will not prevent receipts from their use of the club’s facilities from being taken into account for tax unless their rights as temporary members (such as rights to vote at meetings, participate fully in club activities and generally to exercise control over the running of the club), and the opportunities to exercise them, are similar to those of full members. In computing the taxable income derived from non-members in this way the related expenses will be deductible, including a reasonable proportion of course overheads.