Brokers deals with clubs and associations threatened by withdrawal of tax-free status
Brokers who arrange policies for the hundreds of UK clubs and associations could lose out on millions of pounds of business due to a clamp-down by the Inland Revenue.
Many associations have until now been able to offer their members cheap insurance through brokers by taking advantage of corporation tax breaks thanks to their mutual trading status.
But the Residential Landlords Association (RLA) and the British Mountaineering Club (BMC) are two of five clubs known to have come to the attention of tax collectors who claim the brokers' role in arranging cover breaks the mutual link.
Experts warned that if the clampdown is successful, it may no longer be viable for associations to offer competitive cover for their members, thereby cutting off a valuable distribution channel for brokers.
Accountant Rob Newman of Salter Newman, said: "The arrangement at the RLA and the BMC is typical of a great many associations and groups that offer competitive insurance to their members.
"My concern is that the Inland Revenue is using these as test cases in a bid to crack down on organisations up and down the country."
RLA chairman Alan Ward said: "Insurance has always been an essential part of RLA's service. This calls into question the whole way we offer insurance."
The Inland Revenue would not comment on individual cases, but stated that rules relating to the mutual standing of such groups had not changed.