and charitable sports clubs. - Sport and Recreation Alliance

BATES WELLS & BRAITHWAITE LLPA BRIEF OUTLINE OF THE LAWS RELATING TOCOMMUNITY AMATEUR SPORTS CLUBS (CASCS)AND CHARITABLE SPORTS CLUBS.

RegistrationTax ReliefsRate ReliefSubmit to HMRC's Charities and CASCsUnit the CASC application form(available onwww.hmrc.gov.uk/casc/cascappform.pdf)plus• A copy of the CASC's constitution• A copy of the CASC's latest accountsand bank statements• A copy of the CASC's prospectus,members handbook, rule book, etcTop Tips for Registration• Read the HMRC's guidance carefullyto ensure the club is eligible• Check the club's constitutioncomplies; if not consider submitting arevised version in draft to HMRCtogether with the other registrationdocuments. The Sport and RecreationAlliance has appropriate model clausesand other information on their website -see www.cascinfo.co.ukFor CASCs• Exemption from Corporation Tax onprofits from trading where the turnoverof the trade is less than £30,000.• Exemption from Corporation Tax onincome from property where the grossincome is less than £20,000.• Exemption from Corporation Tax oninterest received• Exemption from Corporation Tax onchargeable gains.For Donors• Individuals can make gifts to CASCsusing Gift Aid.• Individuals can obtain relief fromInheritance Tax for gifts to CASCs.• Businesses that give goods orequipment that they make, sell or useget relief for their gifts.• Gifts of chargeable assets to CASCs byindividuals or companies are CapitalGains Tax free.• CASCs get 80% mandatory and 20%discretionary rates relief on premisesthey occupy wholly or mainly for thepurpose of the club.

Charitable StatusQualificationTo qualify as a charitable sports clubthe club must:-• Either promote communityparticipation in healthy recreation byproviding facilities for playing sports oradvance amateur sport;• Have membership and facilities thatare open to all without discrimination;• Be amateur;• Be for public benefit.This means“Healthy Recreation”• If practised with reasonable frequencywill tend to make the participanthealthier i.e. less susceptible to disease.• Healthy sports are not the same asthe HMRC's list for CASCs and excludeangling; ballooning; crossbow; rifle andpistol shooting; flying; gliding; motorsports and parachuting.*“Amateur Sport”• “Sport” means sports or games whichpromote health by involving physical ormental skill or excursion.*“Open membership” i.e.• Facilities have to open to all.• First come first served• Membership must be affordable.• There must be no test of skill foradmission.*“Competition and team structures” i.e.A charitable sports club:-• Can run competitive teams, leaguesand ladders• Can allocate facilities to allowcompetitive teams to train, play etc• Must always bear in mind that theclub is promoting communityparticipation and therefore gives equaltreatment to less skilful and; lesscompetitive players.*“Coaching” i.e.• May be given if available for all levelsof skill and can assist the better playersprovided this is not to the detriment ofothers.*“Playing and non playing members” i.e.• A charitable sports club cannot have aseparate group of social members assuch, although non-playing membersthat help run the club are allowed.*• The Charity Commission recommendsthat bars be run through a separatecompany.“Amateur” i.e.• Players are not paid but expenses canbe reimbursed; *• Player/ coaches may be paid.“Public Benefit”• A charitable sports club shouldcomply with Charity Commissionguidance on public benefit - this isavailable on their website;• This includes a requirement thatthose in poverty must not be excludedfrom the opportunity to benefit.Charitable clubs therefore need toconsider options such as subsidisingsome membership subscriptions forthose who cannot afford them or makingfacilities available to non-members.

RegistrationTax ReliefRate reliefIn England and Wales to submit to theCharity Commission an onlineapplication (available on www.charitycommission.gov.uk)plus:-• A copy of the club's constitution;• Evidence that the club will have atleast £5,000 income in the first year;• Declaration signed by thetrustees/management committee.In Scotland submit to OSCR a copy ofthe club's constitution together withsupporting documents. They are willingto consider draft constitutions.For clubs in Northern Ireland a copy ofthe club's constitution and details ofactivities should be submitted to theHMRC office at Bootle, Merseyside.For CharitiesCharities enjoy more extensive taxrelief's than CASCs. These are:-• Exemption from Corporation Tax on allprofits not derived from fulfilling itscharitable purpose• Exemption from Corporation Tax onprofits not derived from fulfilling itscharitable purpose on the lower of 25%of its turnover or £50,000.• Exemption from Corporation Tax oninterest received• Exemption from Corporation Tax onCapital Gains• Exemption from Stamp Duty LandTax on purchase of propertyFor Donors• Companies and individuals can makegifts to charities under Gift Aid• Individuals can obtain relief fromInheritance tax for gifts to charities.• Businesses can give goods orequipment that they make, sell or useand get tax relief for their gifts.• Gifts of chargeable assets to charitiesare free from Capital Gains Tax.Charities obtain mandatory 80% rate onpremises they occupy and are eligible toapply for discretionary relief for theremaining 20%.

A comparison of CASCs and Charitable ClubsChoosing Charitable StatusChoosing HMRC – CASCChoosing no changeWhich clubs canregister?Those which promote communityparticipation in healthy recreation orpromote amateur sport.Healthy sports.This currently excludes sports such asangling, flying and snooker. *Sports recognised by The SportsCouncils and listed in the HMRCguidance (which is on their websitewww.hmrc.gov.uk).N/AWill the club needto change itsconstituton?Probably, the club’s objects must bewholly charitable i.e. to promotecommunity participation in healthysport or advance amateur sport.Maybe; the club must be not for profit,this means that the constitution mustfor example have a winding up clausethat prohibits assets being dividedamongst members and instead providesfor such assets to go to a charity, CASCor the sport’s governing body.NoCan the club havesocial members?No, but non-playing volunteers andhelpers are acceptable. This mayinclude parents of junior members orpeople who still wish to be associatedwith the club but are unable to play forreasons of health or old age.Yes, as long as the substantial majorityof the clubs activity are focussed onproviding facilities for, andparticipation in eligible sport(s). As arule of thumb over 50% of membershould participate (this includes bothplaying and organising activities).YesCan players be paid?No, But a player who also coaches ormaintains the pitch, for example can bepaid for this service. Players’ expensescan be paid if it promotes participation.No, But a player who also coaches ormaintains the pitch, for example canbe paid for this service. Playersexpenses can be paid.YesCan the club havecompetitive teams?YesYesYesCan the club runa bar?No, this must be run through a tradingsubsidiary, unless the turnover is thelower of 25% of the clubs turnover or£50,000.Yes, if it is a social adjunct to the mainsporting purpose.YesWhat about directtax?Primary purpose trading income is taxfree.Gross income from fundraising andtrading is exempt from tax if turnover isless than £30,000.No concessionsAll rental income exempt.Gross income from property exemptfrom tax where it is less than £20,000(if over this all is taxable).No concessionsCapital gains and interest exempt fromtax.Capital gains and interest exempt fromtax.Capital gains (subjectto re-investment relief)and interest taxable.What about gift aid?Yes- for individual and corporatedonationsYes- donations from individuals onlyNo

Choosing Charitable StatusChoosing HMRC – CASCChoosing no changePayroll Giving?YesNoNoInheritance tax reliefon gifts?YesYesNoIncome tax relief ongifts of shares?YesNoNoStamp duty law taxexemption?YesNoNoDoes the club haveto register?Yes, within the Charity Commission inEngland and Wales. With the OSCR inScotland and the CCNI in NorthernIreland.Yes with HMRCNoRate Relief?Yes, - 80% mandatory, 20%discretionary.Yes - 80% mandatory, 20%discretionary.Discretionary up to100%Stamp Duty LandTaxFull reliefNo reliefNo reliefValue added taxNormal VAT rules apply but reliefs maybe available• Zero rating the construction costs ofnew buildings• Exemption for income from one offfund raising eventsNormal VAT rules apply.Normal VAT rulesapply.Donations fromcharities?Easy if they have compatible objects.Possible. Informed donor charities willunderstand and make donations; othersmay be reluctant.As for CASCsExtent of specificregulation relating tothe club's status.Annual returns need to be submittedand the Charity Commission has widepowers to investigate the Club'sactivities.Very light touch from HMRCNoneCan profits bedistributed tomembers?NoNoYes* Following the Charity Commission's recent consultation on amateur sport (which closed on 31 May 2011) we areexpecting new guidance to be issued from the Charity Commission. Issues marked with an asterisk may be subject tochange. The current guidance is RR11.This booklet contains a brief summary of the law at 20 June 2011. This is for information only and does not constitutelegal advice. Specific Advice must be sought for particular circumstances.

Bates Wells & Braithwaite LLPSolicitorsBWB is recognised as one of the leadingcharity law firms in country. It wasestablished by Lord Philips of SudburyOBE in 1970. He has been active formany years in campaigning forCommunity Amateur Sports Clubs to begiven recognition as charities. Havingfailed to obtain the registration of theNorth Tawton Rugby Club as a charityhe led efforts to have CommunityAmateur Sports Clubs (CASC) awarded aunique tax status akin to that of acharity but without being registered as acharity. That campaign reached itsfulfilment in the 2002 Finance Act.Lord Philips continued campaigning forrates relief for CASCs, this was acceptedby the Government in 2003.Our ServicesWith our long history of advising a widevariety of charities from internationalhousehold names to small start up aswe are uniquely placed to work withorganisations that wish to takeadvantage of either charitable or CASCstatus. We can provide a comprehensiveservice including advice on:-• Registration as a charity• Registration as a CASC• Helping establish model forms ofconstitution for charitable sports clubsor CASCs• Establishing charitable foundations tofund charitable sports clubs or CASCs.• Fundraising• Establishing charities affiliated tosports national governing bodies (who aspart of their role can assist clubs inbecoming charities or CASCs).• Tax planning, financing and VAT• Rate relief• Trustees' powers, responsibilities andliabilities.• Employment• Charitable trading activities• Intellectual property• Land transactions• Litigation

Bates Wells & Braithwaite LLPSolicitorsOur ReputationWe have a proven track record ofhandling a wide range of work in a costeffective manner. We aim to give clearand practical advice that meets clientsneeds.The TeamOur community amateur sports team ismade up of:-Thea LongleyMary GroomAugustus Della-PortaBill LewisIn addition they are supported by theother 25 members of our charity andsocial enterprise team, and colleaguesin the property, dispute resolution andemployment teams.Thea Longleyt.longley@bwbllp.comWith BWB since 1999. A Partner in theCharity and Social Enterprisedepartment and joint heads of theSports Group. Specialises in charity lawand acting for social enterprises.She represents sports charities, NGBs,clubs and donors. Chaired the CharityLaw Association Working Party onAmateur Sport.Mary Groomm.groom@bwbllp.comQualified at BWB in 1998. A Partner inthe Charity and Social Enterprisedepartment. Specialises in charity lawand advising social enterprises, inparticular organisations carrying outeducation and regeneration activities.Has played competitive tennis at clubsin Middlesex and Hertfordshire.Augustus Della-Portaa.della-porta@bwbllp.comQualified at BWB in 2009. A solicitorin the Charity and Social EnterpriseDepartment. Specialises in charity lawand advising charities and not for profitorganisations with a particular focus onsports clubs and national governingbodies. Recently assisted in preparingthe CLA's response to the CharityCommission's Consultation on AmateurSport.Bill Lewisb.lewis@bwbllp.comA consultant in the Charity & SocialEnterprise Department. Advises on allaspects of taxation affecting charitiesand sports clubs (VAT, PAYE,Corporation Tax). Is involved in runninga CASC, Hemingfords Regatta.

EnquiriesFor enquiries about any points covered in this brochure, please contact:Mike Townley m.townley@bwbllp.com 020 7551 7822Stephen Lloyd s.lloyd@bwbllp.com 020 7551 7711Robert Oakley r.oakley@bwbllp.com 020 7551 7808Thea Longley t.longley@bwbllp.com 020 7551 7835Andrew Phillips a.phillips@bwbllp.com 020 7551 7702Mary Groom m.groom@bwbllp.com 020 7551 7760Augustus Della-Porta a.della-porta@bwbllp.com 020 7551 7607Jon English j.english@bwbllp.com 020 7551 7780Bates Wells & Braithwaite London LLP2-6 Cannon Street, London EC4M 6YHTel: +44 (0) 20 7551 7777Fax: +44 (0) 20 7551 7800www.bwbllp.comBates Wells & Braithwaite London LLP is a Limited Liability Partnership.Registered in London OC325522.Regulated by the Solicitors Regulation Authority and authorised bythe Financial Services Authority.