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HMRC internal manual

VAT Business/Non-Business Manual

Clubs and associations: Masonic lodges and clubs


Masonic lodges and clubs are treated in the same way as any other membership body or association. They are considered to be in business for VAT purposes where they provide facilities or advantages to members for a subscription or other consideration.

Payments made by lodges to subsidise the running costs of club premises

There is a special arrangement under which lodges in a particular area group together to provide club premises for the use of their members. Normally a group of lodges will set up a limited company run by representatives from each lodge to manage the premises. The facilities provided may include a bar, catering services and co-ordinating activities for the benefit of the lodges and their individual members.

The profits from catering and the bar are often not enough to meet the general overheads and expenses. The lodges have to contribute to club funds to make up the shortfall.

These payments may be described as rents, donations, expenses reclaimed or contributions. They are compulsory and so represent consideration for supplies of services. The service is the provision of facilities.

Payments to the limited company are consideration for an exempt supply of the right to occupy land if a lodge has exclusive use of the premises when it holds its meetings. The exemption is under Group 1 of Schedule 9 to the VAT Act 1994.

However, if the payments are also:

  • for the provision of club or social facilities to freemasons generally, such as shared use of the bar; and
  • the lodges’ payments are subsidising or contributing towards the overheads that are attributable to taxable supplies of social facilities to their individual members

they should be apportioned between these taxable elements and the exempt occupancy supplies.

This is based on the findings of the VAT tribunal in Swindon Masonic Association Ltd. See VBNB75960.

The London Masonic Centre

The Centre was set up to provide meeting places (temples) and dining rooms for Masonic lodges in the London area. The lodges hold meetings in the temples, followed by refreshments in the dining rooms, which are paid for by the members. There are also other facilities available such as bars and meeting rooms.

When new lodges join the Centre they have to pay a levy and registration charge. These charges are taxable in principle but are not taxed because the resultant supplies are minimal. This should not automatically be treated as a precedent for other centres.

Unsecured debentures

A centre may also issue:

  • redeemable bonds - an entirely voluntary payment - or:
  • unsecured debentures.

Debentures are normally exempt under Group 5 of Schedule 9. However, where the purchase of a debenture is a compulsory requirement of membership of the centre it is part of the consideration for the supply of membership benefits to the participating lodges.

The unsecured debenture is therefore non-monetary consideration. Guidance on non-monetary consideration is provided at paragraph 7.4 of V1-12 Valuation.

You should take the value as the total interest which the centre would otherwise have had to pay if it had raised a similar amount of capital from its bank when there is no evidence to show what the parties regarded this value as being.

This notional interest income is usually standard rated but its liability will follow that of the supplies for which it is consideration. See paragraph 7.4 of V1-12 Valuation for full details of the notional interest calculation.