BIM24200 - Meaning of trade: mutual trading and members clubs: members’ clubs: layout of guidance: contents

You need to consider two interrelated questions:

• first, is there a trade (see BIM24045), and
• second, if there is a trade, is that trade a mutual trade (see BIM24100).

The first of these questions, whether or not a trade exists, is all too often overlooked. This is of particular relevance for social and recreational clubs. This subject represents one strand of the ‘mutuality’ case law (mutual insurance being the other major strand - see BIM24100 onwards).

The use of the term ‘mutual trading’ in the context of a members’ club is misleading, since when members of such clubs come together to provide facilities for themselves, their activities do not normally constitute a trade, because they lack the necessary commerciality.

If there is no trade, there can be no mutual trade and therefore you do not need to consider the issue any further.

So the practical starting point in an apparent case of mutual trading, is to consider whether there is any trade at all.

Allowable expenditure in ‘mixed’ cases, including part mutual and part non-mutual trading, is considered at BIM24450 onwards.

The following guidance covers:

1. BIM24205

   Members' clubs: introduction
2. BIM24210

   Members’ clubs: distinction between proprietary and members’ clubs
3. BIM24215

   Members' clubs: Tax Bulletin article
4. BIM24220

   Members' clubs: classes of club membership
5. BIM24225

   Members’ clubs: temporary membership
6. BIM24230

   Members’ clubs: Tax Bulletin article on temporary membership
7. BIM24235

   Members’ clubs: voting rights
8. BIM24240

   Members' clubs: different forms of club
9. BIM24245

   Members' clubs: incorporated as industrial & provident societies
10. BIM24250

    Members' clubs: incorporated as limited company
11. BIM24255

    Members' clubs: incorporated as limited company: conditions to be satisfied for members’ club treatment
12. BIM24260

    Members' clubs: incorporated as limited company: shareholder inequality
13. BIM24300

    Members' clubs: guidance for customers
14. BIM24305

    Members' clubs: interest paid or received
15. BIM24315

    Members' clubs: commission income
16. BIM24320

    Members' clubs: community associations
17. BIM24345

    Cricket clubs
18. BIM24350

    Golf clubs: introduction
19. BIM24365

    Rugby clubs: introduction