Community Amateur Sports Clubs
Monday 15th December 2003
Detailed Guidance Notes
As you may have heard, the
Government announced in September 2003 the very welcome news that sports clubs
registered as Community Amateur Sports Clubs ('CASCs') will now be eligible for
Mandatory Rate Relief. This is in
addition to the package of potentially valuable tax benefits already available
to CASCs. We believe that this
development is very valuable for recreational cricket clubs because:
1. rates can be and often are a significant cost to clubs
2. rate relief for CASCs will be mandatory and hence any uncertainty over its availability will be removed
3. it avoids clubs having to register as charities
4. the registration process is exceptionally quick and easy.
Schedule 18 of the
Finance Act 2002 introduced legislation to allow amateur sport clubs to register
as CASCs with the Inland Revenue and so access a package of tax benefits.
Following on from that, the 2003 Local Government Act has introduced
further legislation granting CASCs mandatory rate relief at 80% from 1 April
For a cricket club to
register as a CASC it must meet certain criteria. These criteria are available in detail on the Inland Revenue’s
website on http://.indlandrevenue.gov.uk/casc,
these are summarised below with comments as to whether we believe they are an
issue for a ‘typical’ cricket club. There
are essentially three criteria to be met.
The club must be open to the whole community:
1 a. Membership must be open to the whole community without discrimination. This also means that clubs cannot require an existing level of competence as a condition of membership.
1 b. Fees must be affordable to the community at large.
The club must be organised on an amateur basis:
2 a. the club cannot distribute surpluses or assets to its members; they must be reinvested in the club for the purpose of cricket.
2 b. members can only be provided with the ‘ordinary benefits’ of an amateur club, which are:
2 b 1. sporting facilities
2 b 2. reasonable provision of club owned equipment
2 b 3. provision of coaching
2 b 4. provision of/or reimbursement of, the costs of coaching courses
2 b 5. provision of insurance cover
2 b 6. provision of medical treatment
2 b 7. reimbursement of reasonable travel expenses incurred by players and officials travelling to away matches
2 b 8. reasonable provision of post match refreshments for players and officials
2 b 9. sale or supply of food or drink as a "social adjunct" to the sporting purposes of the club.
2c. the club’s constitution must require that any assets on dissolution of the club be applied for approved sporting or charitable purposes.
main purpose of the club must be to provide facilities for and encourage
participation in cricket.
We believe that the majority of
the above criteria will not pose a problem for recreational cricket clubs. The
potential issues, we believe, are as follows:
3 a. may require changes to the club’s constitution but is almost certainly the practice for the vast majority of clubs.
3 b. will mean that clubs wishing to register as CASCs will not be able to pay players, except in the limited circumstances where the club makes small payments to some players "in order to encourage wider participation". If players are paid for non-playing duties, such as coaching or ground maintenance, this is also acceptable.
3 c. will probably require a change to a club's constitution, although we are aware that many clubs have already introduced such a provision in order to stop the club being "asset-stripped" by outsiders.
summary, we believe that clubs who do not pay players should be able to register
as CASCs relatively easily.
Mandatory Rate Relief
Registered CASCs will
qualify for 80% mandatory rate relief. We
have been advised by the Office of the Deputy Prime Minister that this will be
effective on 1 April 2004 and that local authorities will include with their
2004-2005 rate bills information on CASCs.
Registration as a CASC also
brings with it a package of tax benefits. This
tax package, together with our comments on the potential of each measure, is as
Tax benefits available to club:
1a. Exemption from Corporation Tax on trading income where such income is less than £15000 pa.
1b. Exemption from Corporation Tax on income from property (rental income, etc) where such income is less than £10000 pa.
1c. Exemption from Corporation Tax on interest receivable and gift-aid income.
1d. Exemption from Corporation Tax on chargeable capital gains.
Tax benefits available to those making donations to CASCs
2a. Individuals can make cash donations to CASCs under Gift Aid
2b. Individuals can get relief from Inheritance Tax on gifts to CASCs
2c. Companies can get relief on gifts of goods and equipment
2d. Individual and companies can avoid a taxable capital gain on gifts of chargeable assets.
the tax benefits to apply, the income gains and donations must be used by the
club for its main purpose see 3. above.
of tax benefits
club should assess the value of these tax reliefs based on its individual
circumstances. In general, however, we
believe that the provisions regarding corporation tax will not be of major
benefit for most clubs since few clubs pay corporation tax given the £10000 nil
rate band and the fact that clubs reinvest most of their surpluses back into the
the other hand, we believe the following reliefs could be of significant value:
means that clubs planning to relocate and reinvest in new facilities and facing
a large potential Capital Gains Tax liability (ie because not all of the surplus
is reinvested in club facilities) can do so free of Capital Gains Tax.
could be of significant value to clubs which receive funding from member
donations. Under the provision of Gift
Aid, a cash donation by a member (who is a high rate tax payer) to a CASC of £100
produces £128 to the club whilst only costing the donor £77.
Put another way, if a member wishes to make an after-tax donation of £100,
this would produce £167 to the CASC, an increase of a full 67%.
principles of voluntary donation can also be utilised to benefit the club in
respects regarding subscription and fund raising events as follows:
Subscriptions, though not eligible for gift-aid, may be set at a level
which enables the club to do no more than break even, with a request for a
voluntary donation on top which will attract gift-aid relief.
"Sponsorship" of individuals or the club, in sponsored events,
eg running marathons, can be made under gift-aid.
Fund-raising events where the ticket price is set at a level to pay for
the direct costs of the event with a donation suggested on top which will
attract gift-aid; and
Auctions, where the Inland Revenue will accept that if the price bid for
an item which has a readily ascertainable value, is in excess of that value, the
excess can be treated as a donation. This
donation will qualify for gift-aid relief (further details can be found in
booklet CWL4, published jointly by the Inland Revenue and HM Customs &
Excise – Fund-Raising Events; exemption for charities and other qualifying
could also be of similar value to clubs since donations from a deceased
member’s estate to a CASC will be treated in the same way as gifts to charity
and will attract relief from inheritance tax.
tax reliefs available to CASCs are described in detail in a guide written by the
accountants, Deloitte & Touche. This
guide, "Community Amateur Sports Clubs – The Tax Options" is
available on their website.
registration process is detailed on the Inland Revenue website.
It is extremely simple and requires no more than
the completion of two very brief forms (CASC 3 and CASC 4, examples of which are
on the Inland Revenue website) and the provision of certain club documents.
is one potential issue that clubs need to be aware of.
There are provisions in the legislation covering de-registering as a CASC
so that if a club ceases to comply with the criteria it could be de-registered
by the Inland Revenue. In these circumstances the club is deemed to have
disposed of its chargeable property and then immediately re-acquired it at the
then market value, thus triggering a tax liability on any Capital Gain. This is
an anti-avoidance measure introduced by the Inland Revenue but could have a
potentially adverse impact. This
provision could also affect clubs which are currently totally amateur but which
have ambitions to access higher league levels since, if this resulted in a club
starting to pay players, this would mean that the club would no longer qualify
as a CASC. We believe that there may well be ways around this by splitting off
the 1st team into a separate entity. This
solution is not, however, guaranteed so certain clubs may wish to consider this
anti-avoidance measure first.
Decision making process
on the above and taking into account a 'typical' cricket club we believe that
the decision to register as a CASC can be distilled down to the following simple
three step process:
1 – Will the club materially benefit from converting to a CASC?
believe that the answer to this should be yes if:
the club plays a significant sum of money in rates or would do if the
current level of discretionary rate relief was withdrawn.
the club is planning to relocate or otherwise dispose of its current
property and reinvest in new facilities at a significant capital gain; and/or
the club receives or can potentially receive significant donations from
members or other individuals, either whilst alive or as part of their estate.
the club believes material benefit will arise, then move on to Step 2.
Step 2 – Does the club
accept the consequences of registration?
believe that the answer to this should be yes if:
the club intends to remain as a CASC or accepts the anti-avoidance
the club accepts the consequences of registration, then move on to Step 3.
3 – Can the club qualify?
believe that the answer to this should be yes if:
the club does not pay its players; and
the club makes certain changes to its constitution to restrict the
distribution of assets to its members and to ensure that assets on dissolution
are applied for approved purposes.
the answer to these three questions is yes then we believe that it is likely
that the club will benefit from and should seriously consider registering as a
ECB cannot make a blanket recommendation that clubs should register as CASCs
since all club’s circumstances are unique. Each
club should assess its own suitability for registering as a CASC and take
independent advice if in doubt. We do
believe, however, that the benefits available, particularly mandatory rate
relief, mean that it is likely to be advantageous to very many clubs.
All recreational cricket
clubs are strongly advised to consider this issue.
If your club is interested in registering as a CASC and gaining from Mandatory Rate Relief and other tax benefits, then please contact the Inland Revenue Sports Unit on 0131 777 4147.