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HMRC internal manual

Company Taxation Manual

Particular bodies: clubs: introduction

If a club is established by its members for their own social or recreational objects, it is not liable to tax on trading income as regards any surpluses which arise from transactions with its full members.  This is on the authority of Carlisle & Silloth Golf Club v Smith (1913) 6TC48 and NALGO v Watkins (1934) 18TC499.  However, receipts from outsiders such as visitors or temporary members are subject to tax as trading income  (see CTM40130). Other income and gains of members’ clubs are chargeableto tax in the normal way.

The same guidelines apply to a club incorporated with a share capital (CIR v Eccentric Club Ltd (1923) 12TC657) provided it fulfils the criteria set out in CTM40115 to CTM40125 (see CTM03670 onwards for claims to small profits relief).

If the members’ club pays yearly interest on loans from brewery companies, or other suppliers, it may need to account for income tax – see CTM35215. The club is also liable to tax on interest it receives.