The First Tier Tribunal (FTT) has upheld HMRC’s decision that the 7,500 members of the Professional Golfers’ Association (PGA) are not entitled to claim deductions for their annual membership subscriptions when calculating their taxable earnings from employment, reports Harris & Co chartered accountants Northampton.
The PGA had applied to HMRC for approval under ITEPA 2003, s344, which was refused. The association then appealed to the FTT which, in its first decision to deal directly with this provision, looked at two criteria, both of which needed to be satisfied if the appeal was to be successful.
The first was whether the PGA’s activities are carried on ‘otherwise than for profit’. On this point, the FTT found in favour of the association, arguing that although it generates significant income from its assets and services, the money is ploughed back into its primary activities which are for the benefit of members.
However, on the second point, which centred on whether the PGA’s activities are ‘wholly or mainly directed’ to the objects listed in s344 (2), the FTT found against the association. The tribunal ruled that the PGA’s main purpose in organising tournaments is to assist members in developing their earning potential, with maintaining or improving their professional competence a secondary consideration.
Since both criteria have to be satisfied for the subscription deductions to be allowed against employment income, the PGA’s appeal was dismissed.