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HMRC internal manual

Business Income Manual

From
HM Revenue & Customs
Updated
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Meaning of trade: mutual trading and members clubs: allocation of income: sundry income

Many sporting clubs operate a variety of fund raising activities including:

  • Supporters’ shops - much of the over the counter trade is likely to be with members. But if the club advertises goods for sale by mail order there are likely to be significant sales to non-members. You will need to examine closely any claim that the profits from mail order sales are derived from mutual trading. Where members are charged different prices you will need to weight the figures accordingly.
  • Lotteries, raffles, scratch cards etc - These will be operated in accordance with the Gambling Act 2005. If operated by the club the profit will form part of their trade profits and will need to be apportioned between mutual (with members) and non-mutual (with others). You will need to consider the possible application of SP/C1 - see BIM61600 onwards.
  • Sponsorship - receipts from sponsorship are not part of the mutual trade and are to be included as receipts in computing taxable trade profits unless provided personally (not by their company/partnership/business) by a member of the club.
  • Hospitality boxes - income from hospitality boxes let to non-members (including drinks and catering) are not receipts of the mutual trade. The profits will be taxable as trade profits.
  • Advertising - the income will be from the non-mutual trade and included as receipts in computing taxable trade profits.
  • Hire of facilities - this is non-mutual income.
  • Programme sales - if produced and sold by the club you will need to split between mutual and non-mutual. If franchised out to a third party then the income will be non-mutual.
  • Catering - if provided by the club you will need to split between mutual and non-mutual. If franchised out to a third party then the income will be non-mutual. If there are specific member only facilities then the income will be mutual. If there are specific non-member facilities then the income will be non-mutual.
  • Gaming machines - if the machines are located in parts accessible only to members then the income will be part of the mutual trade. If accessible to non-members you will need to apportion, by reference to usage.
  • Car parking - if member only, then the income is part of the mutual trade. If available to non-members then you will need to apportion by reference to usage.
  • Television income - part of the non-mutual income.
  • Grants from governing body, Lottery Commission, whatever - part of the non-mutual income. The treatment will follow the treatment of grants in general - see BIM40450 onwards.
  • Donations - gifts are not taxable. You will need to be satisfied that any donation is just that and not a trading receipt - see BIM41800 onwards.
  • Commission on sale of debentures - part of the non-mutual income and taxable.