Never mind the offside rule, a leading tax body has urged amateur sports clubs to be mindful of the tax rules if they want to keep HMRC on side. Here we explain certain rules and reliefs that may be of benefit to your club.
At the start of the last football season, the Association of Taxation Technicians (AAT) urged amateur sports clubs to think of the cheering crowd as their 12th man – and the tax rules as their 13th.
“Being a well-run amateur club includes understanding how the tax system might help the club’s finances, while keeping HMRC onside,” said the Co-chair of the AAT.
Community Amateur Sports Clubs
One scheme, whereby local clubs register for Community Amateur Sports Club (CASC) status, can be of particular benefit financially.
The CASC scheme, has been up and running since 2002. It is sometimes compared with having charitable status and allows clubs to take advantage of various tax reliefs, including Gift Aid on gifts from individuals. Other benefits include exemption from tax on bank interest and capital gains. In addition, clubs with CASC status do not have to pay tax on trading profits, where the club’s yearly trading turnover is below £50,000, and rental income below £30,000 per annum.
Where CASCs differ from charities, though, is in regard to VAT. There are no specific VAT reliefs for CASCs and they are not eligible for charity VAT reliefs on the purchase of goods and services.
Participating clubs must appreciate that there are a considerable number of terms and conditions associated with the scheme. HMRC publish extensive guidance, which you can read here.
Applying for CASC status
There are a number of conditions that must first be met to join the scheme. To be eligible for CASC status, a club must:
- be open to the whole community
- be organised on an amateur basis
- have as its main purpose the provision of facilities for, and the promotion of participation in, one or more eligible sports
- not exceed a specific income limit
- meet a specific management condition
- meet a specific location condition.
Clubs will also need to provide a suitable governing document.
CASC is intended to be a permanent status. De-registration is not an option unless the club becomes a limited company at a later date. Once made, an application cannot be withdrawn. If a club no longer meets the eligibility criteria, however, it may be de-registered by HMRC.
Following the correct procedure when an individual makes a donation under the Gift Aid scheme is very important. If a CASC does not keep the right records, it may have to pay HMRC back any tax reclaimed, plus interest, and risks having to pay a penalty. That said, the advantages of the scheme to amateur clubs are considerable.
CASCs can also benefit from using the Gift Aid small donations scheme. This means they can claim a ‘top up’ payment on cash donations of £20 or less. The small donations scheme does not require the club to record donor identity, or collect a Gift Aid declaration, making it ideal for fundraising activities such as street collections.
CASC or charity?
CASCs cannot apply for charitable status. When considering whether to apply for CASC or charitable status, we recommend careful consideration of the different tax reliefs connected to each scheme. If you are unsure which scheme is most suitable, your RfM advisor will be happy to provide an overview of the options.
For information of users: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.