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Golf club: benefit in kind or business expense?

A recent London tax discussion group meeting considered whether playing golf as part of a networking group is a business expense or should be treated as a benefit in kind.

January 2020

This month’s query concerned the shareholder/director of a limited company who had entered into a national business networking group, the membership of which entitled the company director to a round of golf each month.

The discussion group focused the benefits in kind legislation regarding business networking and related matters.

The membership of a business networking group would normally be considered to be a business-related expense. While the group might be friendly and have an element of entertaining as often there would be refreshments and potentially a meal, the intention of joining the group would be to promote the business and meet up with potential clients, suppliers, introducers or other business-related contacts.

Membership of the local golf club would normally not be a business-related expense, as this would usually be a personal membership, and any business-related benefit from the subscription would be incidental. The main purpose of the golf club membership would be to play golf and to use the facilities personally. If such subscriptions were taken out by a limited company, then there would be P11D benefit-in-kind charge and a Class 1a National Insurance charge.

The arrangements which were outlined in the group discussion would therefore fall between these extremes. The accountant involved said the client was adamant that there was no personal benefit from this, despite the fact that he was a keen golfer.

The client had explained to the accountant that the networking group membership was limited to those in business or for those who held senior management roles in large businesses. He explained that a round of golf with such people enabled him to meet up with a variety of potential business-related contacts, which would otherwise be difficult to get in touch with without a face-to-face meeting at such an event.

He explained that he had already made some useful contacts and expected to increase his business turnover from the monthly business golf networking he did. He also accepted that any other golf memberships, or informal ad hoc rounds of golf at any local clubs would be a benefit in kind but said that was why he had not charged these to his company.

Each month (with the exception of July and August) the Tax Discussion Groups in Croydon and South East London meet to discuss client tax issues on a no-names basis. These meetings are free to attend and normally cover over a dozen tax issues raised by those attending.

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