IPSE Membership FAQs

FAQs

Can I claim my membership fees through my company?

Summary: 
- Membership fee amounts are not claimable against the company's Corporation Tax bill (Fee Protection Insurance rules apply http://www.hmrc.gov.uk/manuals/bimmanual/BIM46452.htm)
- Membership fee amounts are not claimable against personal income tax ("Trade Protection Associations" http://www.hmrc.gov.uk/manuals/bimmanual/BIM24800.htm)
- Membership fee amounts CAN be claimed as an expense from the company and thereby avoid having to pay it from post-tax personal income.

Detail:
IPSE is what is called by HMRC a “trade protection association” – that is, an association formed to protect the common interests of its members and funded by their annual subscriptions. 

Many years ago (1913, actually) a member of a trade protection association went to court to claim tax relief for its contributions. If anyone’s interested, it was the Lochgelly Iron & Coal Company Ltd and the company was paying subscriptions to the Fife and Clackmannan Coalowners’ Association. The Court of Session decided that although the subscription was not deductible as such, the company could “look through” the Association and have tax relief for that part of their subscription which was applied by the Association towards expenditure which would have been allowable had it been incurred directly by the company itself.

Two years later the Grahamstown Iron Company of Falkirk (a place incidentally where the Scots were heavily defeated by the English in 1298 but won the re-match in 1746) were in court claiming relief for their subscriptions to the National Light Castings Association. However, unlike Lochgelly they did not have the Association’s accounts to hand and were unable to demonstrate what their subscriptions had in fact been spent on. The company lost its case and the principle was established that a member of a trade association could not get tax relief for its subscription without exhibiting the accounts of the association itself.

To avoid the need for all members of an association individually to negotiate with HMRC what proportion of their subscription is tax-deductible under the principles established in the Lochgelly and Grahamstown cases HMRC offer a non-statutory “arrangement”. Under this they will allow members to have tax relief for the subscription provided the trade association accepts liability to Corporation Tax on the excess of its receipts over its payments (subject to some limitations). This is the only non-statutory arrangement which HMRC will contemplate: in particular what you might think would be the obvious solution (namely, agreeing with an Association what proportion of the subscription has been spent on things which would have been tax-deductible if incurred directly by the member, and then allowing tax relief to the member for that proportion of his subscription) is not on offer.

In correspondence with IPSE (or PCG as we then were), HMRC made it clear that before agreeing to enter into the arrangement with IPSE/PCG they would wish to have details of membership. The Board of PCG considered that it would not be in the interests of members for details to be provided to HMRC and as a result the arrangement is not available to IPSE/PCG.
The advice that the Board have had is that the strict legal position in this area is completely clear, having been established many years ago by the cases cited above. As a matter of law, any appeal against the way in which HMRC administer a non-statutory arrangement could only be by way of judicial review, of which the outcome would be uncertain and of which the cost is considered to be out of all proportion to the benefit to IPSE and its members.

Members who wish to confirm the position for themselves may want to look at the HMRC website http://www.hmrc.gov.uk/manuals/bimmanual/BIM24800.htm


Sometimes, there is a suggestion that a member's subscription fees should be put through the company's books as an Insurance, and therefore *could* by claimable against the CT bill. HMRC's Business Income Manual and entry BIM46452 "Fee Protection Insurance". http://www.hmrc.gov.uk/manuals/bimmanual/BIM46452.htmcovers this scenario. The implication of this is that you CAN'T put the IPSE Membership through as insurance and claim it against the CT bill.