Are the members of an unincorporated club liable to tax when the club distributes unwanted funds to the members in accordance with the club constitution which caters for such a distribution pro rata to years of membership? The details are as follows:
- No member has paid an initial contribution.
- Members pay an annual subscription.
- There is a surplus from mutual trading but much of the distribution will be from the sale of the club premises.
- The club will be liable for corporation tax on the gain.
The premises were used by the members except that there was a flat above with shared access rented to tenants. The club has paid corporation tax on the net rental income. Would the answer be different if the distribution was on a winding up?
Query 20 360– TheythinkIknow.
It’s likely that the distribution would be treated as a capital receipt.
The...
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