DMBM585160 - Pre-enforcement: consider the defaulter: proprietary and members' clubs
Some content of this manual is being considered for archiving. If there is content you use regularly, please email hmrcmanualsteam@hmrc.gov.uk to let us know as soon as possible.
A club may, by its constitution, be either a proprietary club or a members’ club. Certain clubs may also be unincorporated associations which are associations of persons not in partnership and not registered under any act of Parliament (see below). For further information on unincorporated associations see DMBM585165.
It is necessary to establish beyond doubt the type of club involved, and whether or not the club is incorporated.
The assessing office, employers section or the club itself should be able to tell you the type of club and other necessary information.
You will need to establish who is in control of the club and assess the assets position. Taking Control of Goods (TCoG) is the preferred enforcement option but if you are unable to use this particular method take county court proceedings.
Proprietary clubs
Members of proprietary clubs pay subscriptions to the owner of the club, who may be an individual, a partnership or a limited company. It is the owner who is the employer and is responsible for payment of debts. In the case of a proprietary club, take any of the usual enforcement methods against the owner.
Members’ clubs
Members clubs may be registered (incorporated) under either the Friendly Societies Act 1974 or 1992 or the Co-operative and Community Benefit Societies Act 2014. Registration establishes the club as a body with a separate existence from the individuals belonging to it. It also enables the organisation to hold property and assets and enter into contracts in its own right.
TCoG remains the preferred method of enforcement (England & Wales and Northern Ireland) but in the absence of any effects for TCoG, you should arrange for the present officers of the club to be interviewed preferably collectively but if not individually.
Establishing whether a club is registered under the Friendly Societies Acts or the Co-operative and Community Benefit Societies act
A check of companies house will show:
- FS for clubs registered as a Friendly Society
- for clubs registered as a Co-operative Society the CRN will have a starting number from 4000
- for clubs registered as a Community Bnefit Society the CRN will have a starting number from 7000
- IP for clubs registered under the old Industrial and Provident Societies Act 1965 referred to now as Registered Societies.
The Mutual Societies Public Records will confirm whether the club or association is registered under one of these Acts.
Members’ clubs registered under the Friendly Societies Acts
Enforce payment by TCoG (in Scotland, summary warrant) wherever possible. As far as court proceedings are concerned the club is registered under the 1974 Act, and it has not converted into an incorporated friendly scoiety, it can be sued in its own name and can be wound up compulsorily as an unregistered company (Section 220 Insolvency Act 1986). If the club is registered under the 1992 Act, or has converted into an incorporated friendly society, it may be wound up like any other company.
If you do not have sufficient information on assets, or do not know who the trustees of the club are, establish these facts by contacting the club itself. You should interview the trustee(s) and warn that unless the club is prepared to make payment in full, or put forward acceptable proposals, proceedings may be commenced in the county court (England and Wales only) joining the trustees as additional defendants.
In the absence of any satisfactory response within 14 days make a final written application to the club for payment. If taking county court proceedings (England and Wales only), judgment is enforceable only against the club’s assets that will be vested in the trustees and it is necessary to join the trustees as additional defendants and serve the trustees separately.
Claims should be served on the club at its registered address, and on the trustees at their private addresses.
Members’ Clubs registered under the Co-operative and Community Benefit societies act 2014 (previously the Industrial and Provident Societies Act 1965)
From 1 August 2014 a club that had been registered under the Industrial and Provident Socities Act 1965 is referred to as a Registered Society. Any new clubs registered on or after 1 August 2014 under the Co-operative and Community Benefit Societies Act 2014 are either a Co-operative Society or a Community Benefit Society.
If a members’ club is registered under the Co-operative and Community Benefit Societies Act 2014 you should enforce payment byTCoG (in Scotland, summary warrant) wherever possible.
If you need to take county court action (England and Wales only) it is a body corporate and can be sued in its own name. The claim should be served on the chairperson or president, secretary or preferably the treasurer. These clubs can be wound up like any other company.
These clubs have registered rule books setting out how they must be run and administered. Examples of such clubs are co-operative societies, sporting clubs, working men’s clubs and political social clubs.
Credit Unions
A credit union is a specialised form of co-operative and community benefit society. Every society registered as a credit union must have a name containing the words “credit union” or the Welsh equivalent.
You should enforce payment in the same way as any other co-operative and community benefit society.
Community Interest Companies (CIC)
CICs are established under the provisions of the Companies (Audit, Investigations and Community Enterprise) Act 2004 and the Community Interest Company Regulations 2005. They are not for profit social enterprises which means that they re-invest any profits for the benefit of the community rather than giving a return to shareholders.
A CIC must have a name ending with one of the following designations:
- For public companies – “Community Interest Public Limited Company” or “Community Interest PLC”
- For other companies – “Community Interest Company” or “CIC”
You should enforce payment by TCoG (in Scotland, summary warrant) wherever possible.
If you need to take county court action (England and Wales only) it is a body corporate and can be sued in its own name. The claim should be served on the chairperson or president, secretary or preferably the treasurer. CICs must be limited companies of one form or another and can be wound up like any other company.
Members’ clubs not registered under either Act (unincorporated associations)
Unless a members’ club is registered under either the Friendly Societies Acts or the Co-operative and Community Benefit Socities Act 2014, it has no legal existence and is simply a group of individuals, that is, an unincorporated association.
If a debt is incurred by an unincorporated association, such as a members’ club, the members will be liable to the extent of their subscriptions. TCoG remains the preferred enforcement option, but in the absence of sufficient effects the club’s officers may be sued in a representative capacity. In England and Wales, if there are insufficient effects for distraint, you should identify as many as you can of the following persons to sue in the county court:
- the chairperson or president
- the secretary
- the treasurer
- the trustees and if necessary,
- the members of the management committee.
You should write to them all individually, ideally at their home addresses, to make sure they are aware of the liability, telling them that in the absence of payment or satisfactory proposals for settlement county court proceedings will be commenced, naming them individually as defendants (England and Wales only).
Your replies may state that the individuals were not in post during the period of the debt or that they have resigned from their position. You should therefore request evidence of this, such as copies of minutes, resignation letters or the club’s constitution. The constitution will often detail the responsibilities of each member and how the financial aspects of the club are to be dealt with. This will help identify which officers of the club are liable.
If there is no response from any of the parties within 14 days, commence county court proceedings, completing the claim form as in DMBM665340.
No statutory liquidation procedures exist and an unicorporated association cannot be wound up under the Insolvency Acts. In the absence of limited liability the officers, and sometimes the membersm may be bankrupted for the debts of the club after obtaining a County Court Judgment against them.
Further Education Bodies
The vast majority of further education colleges and sixth form colleges are statutory corporations incorporated under the Further and Higher Education Act 1992.
The Technical & Further Education Act 2017 applies the Insolvency Act 1986 to further education bodies that are statutory corporations. This includes voluntary arrangements, administration, creditor’s voluntary winding up and winding up by the court. They can therefore be wound up like any other company.
A small number of colleges (‘specialist designated institutions’) are independently constituted charities regulated by their own trust deeds. See DMBM585220 for how to deal with charities.
Members’ clubs in Scotland
In Scotland, whether incorporated or not, the club itself is the employer. The trustees and members of the committee cannot be personally liable; they are liable only as trustees or members for, and on behalf, of the club.
To comply with liquor licence legislation the club must register a list of committee members with the local authority and provide an update of any changes. It is an offence to fail to do so.
Summary warrant and attachment of goods is the preferred enforcement option but in the absence of sufficient effects the club’s office bearers may be sued in a representative capacity.
Unincorporated members’ clubs can be sequestrated.