The Privy Council case of Fletcher v ITC (1972 AC 414) provides a useful contrast to the Westbourne Supporters of Glentoran v Brennan (SPC22) decision (see BIM24225). In the Fletcher case a members’ club made its facilities available, on a commercial basis, to the guests of local hotels. It subsequently admitted the hotels as members, with voting rights. The Privy Council found that the profits derived from the provision of services to hotel guests and were taxable under Case I Schedule D:
The hotels may have become members in 1963; but side by side with their membership there continued the pre-existing relationship with the ordinary members which was essentially a trading relationship, similar to that with outside visitors. What is, and always has been, of significance is not the fact of membership or non-membership but the nature of the transactions: if these were trading transactions, the addition of membership makes no difference.
The fact that the hotels only had one vote and were an
insignificant proportion of the total membership, which meant that
their rights to participate in any surplus bore no relationship to
their contributions, were clearly factors taken into account as
pointing to the continued commercial nature of the transactions.
The utility of Privy Council decisions is described at
BIM35610.
