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Clubs, rental income & corporation tax liability

Clubs, rental income & Corporation Tax liability

I am working on accounts for a Conservative Club, having taken the client over from a retiring colleague.

I understand that profits from the day to day running of the club are not liable for Corporation Tax.  The club also has investment income from a managed portfolio which is liable for CT.

However, this year monthly rental income from a residential property has appeared, along with monthly property management fees.  I am still trying to get to the bottom of this, as in where has this property appeared from, but am I right in thinking that the profit from this should be liable for CT?

 

Many thanks

 

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23rd Mar 2018 10:13

You say "profits from the day to day running of the club are not liable for Corporation Tax", but this needs qualifying - it is only profits from trading with members that is covered by the 'mutual trading' principle. Profits from outsiders arising out of wedding receptions and other functions are taxable. See BIM 24015
Now to answer the question raised; yes the rents will be taxable. They cannot be covered by the mutual trading principle because they are not trading profits.

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23rd Mar 2018 10:48

Quite. You've not quite grasped the rationale, Slomanse.

If you make a profit from members, that's not taxable. If you make a profit from outsiders, it is.

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