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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
, see all updates

Pre-enforcement: consider the defaulter: clubs

A club may, by its constitution, be either a proprietary club or a members’ club. Certain clubs may also be unincorporated associations which are associations of persons not in partnership and not registered under any act of Parliament (see below). For further information on unincorporated associations see DMBM585165.

It is necessary to establish beyond doubt the type of club involved, and whether or not the club is incorporated.

The assessing office, employers section or the club itself should be able to tell you the type of club and other necessary information.

You will need to establish who is in control of the club and assess the assets position. Distraint is the preferred enforcement option but if you are unable to use this particular method take county court proceedings.

Proprietary clubs

Members of proprietary clubs pay subscriptions to the owner of the club, who may be an individual, a partnership or a limited company. It is the owner who is the employer and is responsible for payment of debts. In the case of a proprietary club, take any of the usual enforcement methods against the owner.

Members’ clubs

Members clubs may be registered (incorporated) under either the Friendly Societies Act 1974 or the Industrial and Provident Societies Act 1965. Registration establishes the club as a body with a separate existence from the individuals belonging to it. It also enables the organisation to hold property and assets and enter into contracts in its own right.

Distraint remains the preferred method of enforcement (England & Wales and Northern Ireland) but in the absence of any effects for distraint, you should arrange for the present officers of the club to be interviewed preferably collectively but if not individually.

Members’ clubs registered under the Friendly Societies Act 1974

Enforce payment by distraint (in Scotland, summary warrant) wherever possible. As far as court proceedings are concerned the club can be sued in its own name and can be wound up compulsorily as an unregistered company (Section 220 Insolvency Act 1986).

If you do not have sufficient information on assets, or do not know who the trustees of the club are, establish these facts by contacting the club itself. You should interview the trustee(s) and warn that unless the club is prepared to make payment in full, or put forward acceptable proposals, proceedings may be commenced in the county court (England and Wales only) joining the trustees as additional defendants.

In the absence of any satisfactory response within 14 days make a final written application to the club for payment. If taking county court proceedings (England and Wales only), judgment is enforceable only against the club’s assets that will be vested in the trustees and it is necessary to join the trustees as additional defendants and serve the trustees separately.

Claims should be served on the club at its registered address, and on the trustees at their private addresses.

Members’ Clubs registered under the Industrial and Provident Societies Act 1965

If a members’ club is registered under the Industrial and Provident Societies Act 1965 you should enforce payment by distraint (in Scotland, summary warrant) wherever possible.

If you need to take county court action (England and Wales only) it is a body corporate and can be sued in its own name. The claim should be served on the chairperson or president, secretary or preferably the treasurer.

These clubs have registered rule books setting out how they must be run and administered. Examples of such clubs are co-operative societies, sporting clubs, working men’s clubs and political social clubs.

Members’ clubs not registered under either Act (unincorporated associations)

Unless a members’ club is registered under either the Friendly Societies Act 1974 or the Industrial and Provident Societies Act 1965, it has no legal existence and is simply a group of individuals, that is, an unincorporated association.

If a debt is incurred by an unincorporated association, such as a members’ club, the members will be liable to the extent of their subscriptions. Distraint remains the preferred enforcement option, but in the absence of sufficient effects the club’s officers may be sued in a representative capacity. In England and Wales, if there are insufficient effects for distraint, you should identify as many as you can of the following persons to sue in the county court:

  • the chairperson or president
  • the secretary
  • the treasurer
  • the trustees and if necessary,
  • the members of the management committee.

You should write to them all individually, ideally at their home addresses, to make sure they are aware of the liability, telling them that in the absence of payment or satisfactory proposals for settlement county court proceedings will be commenced, naming them individually as defendants (England and Wales only).

Your replies may state that the individuals were not in post during the period of the debt or that they have resigned from their position. You should therefore request evidence of this, such as copies of minutes, resignation letters or the club’s constitution. The constitution will often detail the responsibilities of each member and how the financial aspects of the club are to be dealt with.

If there is no response from any of the parties within 14 days, commence county court proceedings, completing the claim form as in DMBM665340.

Members’ clubs in Scotland

In Scotland, whether incorporated or not, the club itself is the employer. The trustees and members of the committee cannot be personally liable; they are liable only as trustees or members for, and on behalf, of the club.

To comply with liquor licence legislation the club must register a list of committee members with the local authority and provide an update of any changes. It is an offence to fail to do so.

Summary warrant and attachment of goods is the preferred enforcement option but in the absence of sufficient effects the club’s office bearers may be sued in a representative capacity.

Unincorporated members’ clubs can be sequestrated.