Capital Gain on Sale of Golf Club

[Aidan Smyth]

Capital gains tax on selling golf club land.

I have a client who is a golf club. It is a basic members club and not a limited company or a community amateur sports club.

It is registered for corporation tax, has a unique taxpayer reference number and pays corporation tax on profits from non-members and bank interest.

A developer wants to buy all the land and the board are keen to sell. They will then dissolve the club after distributing the net proceeds among the members.

As far as I understand the trustees/board are liable to report the capital gain on the difference between the March 1982 value and sale price allowing for indexation to December 2017, fees and enhancement expenditure in the normal way.

One of the members who is an accountant says that is wrong and that each of the members is, in effect, selling part of the land (the club holds it as bare trustee) and the proceeds should be divided between all the members and each claim their annual capital gains tax exemption. This would result in a much lower capital gains tax bill overall.

I do not think this is correct but what do readers think?

If the trustees are liable, how are the net distributions to the members taxed?

Also, could I have assistance in locating the legislative reference that brings clubs and associations into the charge for corporate tax as I am not able to find it?

Is this something we could seek HMRC clearance on?

Thank you

[bd6759]

You are correct.

For the purposes of Corporation Tax, “company” includes unincorporated associations - s1121 CTA2010. Therefore the club is liable to CT on its profits and gains, just like a company (mutual trading being excluded).

The club pays the tax, and the distribution to the members on dissolution is tax free.