Back at the start of the last football season, one leading tax body put out the call for amateur sports clubs to think of the cheering fans 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 Association of Taxation Technicians.
Community Amateur Sports Clubs
There is one scheme in particular, involving registration for Community Amateur Sports Club (CASC) status, which can be of benefit to local clubs.
Up and running since 2002, the scheme is sometimes compared with having charitable status. It enables clubs to take advantage of a number of different tax reliefs, including Gift Aid on gifts from individuals. Other benefits include exemption from tax on bank interest, capital gains, trading profits where the club’s yearly trading turnover is below £50,000, and rental income if below £30,000 per annum. CASCs are dissimilar from charities, though, when it comes to VAT. There are no specific VAT reliefs for CASCs, so CASCs are not eligible for charity VAT reliefs on the purchase of goods and services.
It is essential that participating clubs appreciate the considerable number of terms and conditions involved in the scheme. HMRC publish extensive guidance on the Gov.uk website.
Applying for CASC status
There are conditions for joining the scheme, and clubs will need to provide a suitable governing document.
To be eligible, 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
CASC status is meant to be permanent. De-registration is not an option (unless the club is subsequently incorporated), and an application once made can’t be withdrawn. However, if a club no longer meets the eligibility criteria, it may be de-registered by HMRC.
Getting the admin right when an individual makes a donation under Gift Aid is very important, and if a CASC fails to keep the right records, it may have to pay HMRC back the tax reclaimed, plus interest. It may also become liable to a penalty. But the advantages of the scheme are considerable.
CASCs can also use the Gift Aid small donations scheme, which means they can claim a ‘top up’ payment on cash donations of £20 or less. With this scheme, it isn’t necessary to record donor identity, or to collect a Gift Aid declaration, making it ideal for use with fund raisers like street collections.
CASC or charity?
CASCs cannot apply for charitable status, and when considering whether to apply for CASC or charitable status, it is prudent to consider the different tax reliefs attached to each. We would be happy to provide an overview of the options.