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HMRC internal manual

Business Income Manual

Meaning of trade: mutual trading and members clubs: allocation of income: mixed income

There may be broad categories of income that accrue both from members and from non-members.

A simple example is the takings from a bar that is open to members and non-members of a mutual trading entity.

Takings from external functions such as wedding receptions or conferences held on the mutual trader’s premises are wholly taxable as trading income. But where members and non-members use the bar then you will need to establish the usage in sufficient detail to allow an apportionment. If members and non-members are charged the same prices then a simple apportionment is all that is necessary. If there are different prices for members and non-members then you will need to weight the apportionment accordingly.

Where the mutual trader has a members-only facility (restaurant, bar, whatever) the profits arising will arise from a mutual trade and not be taxable as trading income. You will need to be satisfied that only members use the facility.

Where it is necessary to determine any apportionment of income we would not expect the mutual trader to keep detailed records of non-member usage. You can accept a split between members and non-members based upon the monitoring of takings for a representative sample period or periods.