Does anyone have any experience of club rental surpluses being taxed? The subject has been mentioned before at: https://www.accountingweb.co.uk/any-answers/clubs-rental-income-corporat...
The query I was asked, was what happens about corporation tax now that a Covid grant has created a surplus? I pondered the percentage split between members and non-member rentals, only to realise that it was probably not applicable, rental income not being a mutual trade. I have trawled through the guidance, legislation, case law and spoken to the advice line but much advice out there i,e to clubs, seems to ignore the fact that rental income does not qualify as mutual. With clubs normally just covering their property costs, reinvesting surpluses, HMRC seem happy to treat them as dormant. So what happens now, with Covid grants creating surpluses, taxed in the CTAP in which they are received?
Is changing the year end, to match the grant with losses and expenditure even an option if necessary?
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I'm going to make a big assumption here but the phrase "club huts" is something I've only generally seen in the mountaineering club world. If that's the case I'd raise with the BMC or whichever governing body your club is affiliated to.
This has been discussed before and if I've read the link to the legislation properly you'd split the grants received between mutual and non-mutual trading. If you've still made a profit tax would be due, assuming there were no losses to offset (for which most clubs won't have the necessary records)... https://www.accountingweb.co.uk/any-answers/ps10k-small-business-grant-m...
Final issue will be then choosing whether or not to notify HMRC as many sports clubs, unless they have significant trading activity, are not registered for CT.
You didn't mention which governing body was consulted and I mentioned the BMC on the basis that from previous experience they seem to have their head in the sand over clubs' tax status and tend to adopt the "bloke down the pub" approach to advice on these matters. Others, for example, the RYA, BCU, RFU take "proper" paid advice and I tend to consult their club pages over thorny issues like this.
The club I'm treasurer of is a CASC so luckily for me I don't need to worry about the grant income as long as we don't breach the CASC limits. However, prior to getting CASC status my understanding was that property income to non-members was taxable but property income to members was not, as fell under mutual trading exemptions. This is long out of date, but it seems HMRC rarely, if ever, update their guidance on clubs, other than for VAT cases(!) but you could consult the manuals (I haven't and hope to never have to) https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim24000