B1.440 Clubs and other social organisations
It has been held that a company conducting a members' club (not a proprietary club), where the members of the company and of the club were identical, was not carrying on a trade or business or undertaking of a similar character, for the purposes of the former corporation profits tax1. However, clubs are liable to corporation tax on their investment income and capital gains2 (but see Division B5.9 for the special provisions relating to community amateur sports clubs (CASCs)).
A members' club is one where ownership of the club and its assets rests with the general membership who control the club and its dealings. Such control may be exercised through an elected committee. Where the club is a proprietary club, that is the ownership of the club rests other than with the general membership, the profit earned from providing goods or services to its members is not exempt from tax3.
A social or recreational club may be conducted through the vehicle of a company. Provided that all of the following conditions are met, HMRC treat such companies as members' clubs (rather than as proprietary clubs) in agreeing trading profits:
(a) the company does not pay dividends to shareholders;