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An incorporated members’ social club allows visitors to attend functions that it holds. At some of these events most of the participants are non-members. The club has now started to make money from these functions
We act for an incorporated social club which operates by membership only. However visitors come in and the club also holds functions where most of the participants are non-members. We are concerned about the corporation tax consequences of the above because the only taxable income so far has been gross bank interest.
The club has now started to make some money but it is difficult to identify the element of sales and profit that relates to non-members. Is there any methodology we should use?
For example if the club’s total profit is £10 000 and we estimate that 20% is from non-members would that £2 000 be the taxable part? Alternatively must we be more exact by insisting on separate tills and then apportioning the turnover and profit accordingly?
Query 18 395 – Clubber
Reply from Steve Kesby
HMRC’s Business Income Manual at BIM24500...
