Devon Cricket Board - Community Amatuer Sports Club update

SIGNIFICANT CHANGES TO THE COMMUNITY AMATEUR SPORTS CLUB REGIME

REVIEW YOUR POSITION NOW!

After a long period of consultation, changes were announced to the qualifying rules to obtain Community Amateur Sports Club (“CASC”) status in the March 2015 Budget. To recap, CASC status allows amateur sports clubs to achieve many of the same tax benefits as charities including exemption from Corporation Tax on trading income, Gift Aid on donations and 80% mandatory business rate relief.

There were a number of areas of concern in the old qualifying conditions which were of concern to clubs including the rules of payments to players. Likewise, HMRC had concerns over large multi-sports/social clubs being able to claim the reliefs where the majority of their members did not actually play sport.

Changes were announced in the March 2015 Budget and HMRC has now updated their guidance and has been writing to all currently registered clubs encouraging them to review their position.

The letters from HMRC include a checklist designed to help clubs understand whether they breach they new conditions. The key questions are:

· Is the club open to the whole community without discrimination?

Any cricket club who has achieved Clubmark will be able to answer yes to this question. A club needs to have a relevant clause in its constitution confirming it is open to all irrespective of race, religion, sexual orientation etc. This rule does not prevent clubs having different categories of membership or stop clubs refusing or revoking membership due to, for example, bad behaviour or for non-payment of subscriptions.

· What is your annual turnover from trading and from property?

The old rules contained a limit on how much income from trading e.g. bar sales, sales of playing kit, a club could earn from members. This has been withdrawn and replaced by an annual cap of £100,000 a year on income from trading with non-members (most likely to occur in terms of bar and food sales) and property income (e.g. from letting your clubhouse or ground). To qualify as a CASC the club must now not receive more than £100,000 in a year from these two areas.

· Do you pay more than £10,000 a year to players?

CASCs are now permitted to make some payments to players (for playing). The cap is £10,000 a year to all players. The calculation of £10,000 includes cash payments of wages/salary and also the value of non-cash benefits such as the provision of accommodation, payment for air fares and use of a car. The value of these non-cash benefits is calculated using the same rules that apply for the normal tax rules on “benefits in kind”.

Certain members of the club (e.g. committee officers or their families) cannot be paid to play.

Payments to members (who also play) for other services provided e.g. groundsman, bar work, coaching do not count towards this limit.

· Is your most expensive membership less than £1,612 a year?

There is an absolute cap on subscriptions and fees to be a member of the club which now cannot exceed £31 a week i.e. £1,612.

This cap is actually quite generous and in regard to most cricket clubs is unlikely to be an issue. This cap is likely to be more of an issue for, say, the larger golf clubs.

· Are the “costs associated with membership” less than £520 a year for all members?

“Costs associated with membership” is made up of membership fees and any additional fees to participate in the sport. Such additional fees might include charges for using the club’s facilities, match fees, fees for hiring specialist equipment, the cost of purchase or hire of equipment that is necessary to participate in the sport, the cost of purchasing or hiring clothing the club requires the member to wear and any insurance costs for the member to participate.

The costs associated with membership should not exceed £10 a week (£520pa), for the club to qualify as a CASC.

In a cricket context, costs associated with membership will include: -

o Annual subs;

o Teas/match fees;

o Training fees;

o Playing kit which is required to be worn (whites).

Cricket clubs will need to be careful to ensure their combined costs do not exceed £520pa. The assessment of the cost of whites does not necessarily mean you have to include the cost of club/sponsor branded attire (unless it is compulsory to wear it for matches). The assessment can include the cheapest whites available.

Theoretically, the analysis would also include the cost of buying equipment (bats, pads, gloves, helmets, spikes).

Even taking the lowest cost of such equipment the cost could easily exceed £520pa. However, most clubs will have kit bags both for juniors and senior players which is provided by the club so in most cases this will not be an issue. If the club does not a club kit bag and requires individuals to buy their own playing kit then this could be an issue in terms of CASC status. Of course, affiliated clubs with junior sections will be able to access kit bags through the Lords Taverners so this issue would also be capable of being resolved easily.

There are examples of how to calculate whether your costs exceed £520 on HMRC website.

· If your costs exceed £520, do you make a provision for those members who cannot afford to pay £520 a year and clearly advertise this facility?

This is in essence to ensure that those who cannot afford a high level of subscriptions and other costs can still afford to play and therefore the club is not discriminating against those people who cannot afford to partake. As mentioned above, ensuring kit bags are available will be the major issue for most cricket clubs, although operating reduced subscriptions and match fees for e.g. students/unemployed or a “used kit” exchange scheme where colts have grown out of kit would also be ways of addressing this issue.

· Are more than 50% of your members participating members?

To qualify as a CASC, the club must now have at least half its members participating in its sport. Participating does not just mean playing. In a cricket context it will include coaches, umpires, scorers, groundsman and committee members.

HMRC expect clubs to keep records to record participation. This should not provide a significant hurdle because Clubmark clubs are required to keep registers of training sessions etc., and clubs will also have scorebooks and statistical records to demonstrate playing and officiating participation which should be sufficient.

Individuals who are part of family or other group membership of the club are all counted separately for the purposes of the test.

Cricket clubs with large social memberships, or those who are part of larger multi-sports sites will certainly need to review this condition in detail.

· If you reimburse or pay your members travel and subsistence please confirm that you are compliant with the new guidance?

The rules now require any travel and subsistence costs paid to club members to be “reasonable”. Reasonable in this context means “not excessive”. So, for example, payments within the HMRC approved mileage rates of 45p a mile for the use of private cars would be allowable as would standard class rail travel.

What happens next?

If your club can answer yes to all the questions on the checklist then it can retain its CASC registration and there is no issue.

If you answer any one of the questions no, then your CASC status is at risk. There are then two courses of action. The club must either amend its constitution/operations in order to fix the problem so that it can retain its registration, or it needs to de-register as a CASC.

Technically, de-registering as CASC could give rise to a tax liability, particularly if the club has investment assets or owns (or has a lease of over 50 years on) its ground/clubhouse.

HMRC have said that if a CASC no longer meets the conditions as a result of the change in rules, no tax will arise on de-registration provided the club de-registers before 1 April 2016. Any club not de-registering by then and not qualifying under the new rules may suffer tax charges on de-registraton.

The main impact of de-registration will be the loss of tax relief on non-member income, the loss of availability of Gift Aid on donations and importantly loss of 80% mandatory business rate relief.

If a club thinks it may breach the new rules, it should seek professional advice. Devon Cricket Board Finance Director, Jon Sparkes, is happy to discuss specific issues with affiliated clubs for an initial sounding.

Other options, such as obtaining charitable status, may be achievable if the club finds it cannot sustain CASC registration. These options need careful consideration and again professional advice should be sought before pursuing any change in structure of the club.

Jon Sparkes

16/7/2015