Corporation Tax Act 2010 section 202C

Inflated member-related expenditure

Section 202C defines what counts as "inflated member-related expenditure" for the purposes of restricting relief on payments to community amateur sports clubs (CASCs) under section 202B.

• Expenditure is "inflated member-related expenditure" if a company pays above arm's length rates to employ a club member, or if a club member or member-controlled body supplies goods or services to the club on terms that are not at arm's length
• However, if the non-arm's length features of the arrangement are actually more advantageous to the company than a fair market deal would have been, the expenditure is not treated as inflated member-related expenditure
• A company is "member-controlled" if a club member (or members acting together) can control the company's affairs through shareholdings, voting power, or constitutional documents; a partnership is "member-controlled" if a club member (or members together) are entitled to more than half its assets or income
• References to a club member include anyone connected with that member, and HM Treasury may make regulations (subject to House of Commons approval) specifying what does or does not count as employment expenditure for these purposes