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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: cricket clubs

Factors to take into consideration

There is considerable variation in the size and range of activities undertaken by cricket clubs. At one end there is the village team and at the other the first class county side. What may be termed the ‘professional’ game has seen increasing commercialisation over the years; the arrival of sponsorship money and the sale of television rights.

As an initial step you will need to consider two interrelated questions:

  • whether the cricket club is carrying on a trade, and
  • if it is trading, the extent to which that trade is a mutual trade.

The club may say that it is organised on a ‘not for profit’ basis. The absence of a profit-seeking motive does not however mean that it is not trading - see BIM24045.

But smaller members’ recreational cricket clubs are unlikely to be carrying on a trade and so the issue of mutual trading will not arise - see BIM24200 onwards.

A full-blown professional club is likely to be trading but it may organise its affairs in such a manner that the whole or part of its trade is a mutual trade. Where it doesn’t then not only will the income it derives from third parties be taxable as trading income but also income from the provision of facilities to members.

Mutual trading arises where a class of people come together to put up money to achieve an object for each other and to divide what is not wanted amongst themselves. The conditions that have to be satisfied are at BIM24020.

When considering if a cricket club is carrying on a mutual trade you need to establish precisely what the members contribute and what rights, benefits and privileges are conferred upon them. If membership gives little more than ‘free’ access to all home matches it may be seen to be no more than the purchase of a season ticket and not representative of mutual trading. You need to establish if members are required to pay commercial rates for access to other matches (for example cup or knockout tournaments). Once admittance has been gained, are members treated in the same way as any other paying customer? Are there separate and/or additional facilities and if so how extensive? Is there any distinction between members and non-members at matches where members have to pay for admission?

Income accruing to a cricket club, that is carrying on a trade, from television rights, sponsorship, a share of ECB (England and Wales Cricket Board) funds will all be taxable as trading income and not covered by mutual trading.