sports club corporation tax

sports club corporation tax

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Where a sports club such as a rugby or football club is set up as a company limited by guarantee and has a bar that is used by the players (playing members of the club), non playing members of the club, guests of the members (who are supposed to buy a day membership) the opposition players and their supporters.  Are the receipts of the bar taxable?

Also what about if the bar is hired out for private functions?

I think the private function hire would definatly be taxable, but I am not sure about the normal bar takings.  As the majority will be mutual trading im thinking this aspect does not fall within corp tax but what about the sales to the opposition team and supporters? as these will obviously not be members of the club.

I've just won a client and the previous accountant has only taxed the interest income.  Does anyone know why the private function hire and the sales to the opposing team would not be taxable.  Any guidance that you can point me to would be appreciated.

Thanks

Replies (5)

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By petersaxton
04th Mar 2012 12:04

Trading is taxable

Ignore what other accountants have done with anything. If you don't know then ask HMRC.

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Chris M
By mr. mischief
04th Mar 2012 13:54

My thoughts

First, one thing you can look at to mitigate the potential tax issues is a CASC.  At least considering this will show you care a bit more than the previous accountant.

Trading with the public commercially is taxable, hence private functions are taxable.

Supporters and opposition

Hopefully the club will have a guests' book for opposition team members and supporters to sign in.  For fire regs. most clubs have these.  Such people are temporary members of the club.  Hence the club is trading mutually with itself when it holds matches and such people buy rounds of drinks or whatever.

Ideally for data capture the club will have a till - or manual system at the bar - which is capable of identifying the two separate groups of receipts.  A local cricket club using an ancient manual till was still able to identify on till rolls whether it was a club event or an outside party, and in my view that should be good enough.

Sure there will be the odd passing punter having a subsidised drink at the bar on match day.  But likewise there will be members at the "outside" functions.  So without going to ridiculous lengths of identifying within each round of drinks which was which, writing on the till rolls should be good enough.

Historically, matching up till rolls to the fixtures calendar / outside events diary should do a decent job.  If this is my new client I would definitely question the treatment with the previous accountant as part of the handover.  If he or she goes "ooh, errrr" that is one thing.  But you never know there might be something unusual agreed with HMRC (it happens!) or some other reason which actually stacks up.

 

 

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By Chris Smail
05th Mar 2012 09:43

Read, mark, learn and inwardly digest

http://www.hmrc.gov.uk/manuals/bimmanual/bim24015.htm

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Chris M
By mr. mischief
05th Mar 2012 13:48

CASC link

http://www.hmrc.gov.uk/casc/casc_guidance.htm

Note in my view the main pitfalls in forming a CASC are the probable changes needed to the constitution.  But if a club has a few rich benefactors - which is not that unusual - then Gift Aid alone can make it worth the candle.

 

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By tsp.Shaun
05th Mar 2012 15:38

as a different question how does mutual trading tie in with vat

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