Abbot - if it's a properly-constituted folk club (I stress the word CLUB), then there should be elected officers (including a treasurer), bona-fide members and an AGM at which the financial statements for the year are presented to the members. If the numbers in those statements don't stack up, it's time for the members to grow their balls and ask the elected officers some difficult questions.

If, however, it's just one (or maybe more) individual(s) running a venue, and no formal club exists, (and I know of one or two of those) then they're running a business and are perfectly entitled to make a profit (if they can, and it's a big 'if'). However, in those circumstances, they should be submitting accounts and a tax return to HMRC.

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