Over 5000 sports clubs already receive the tax benefits offered under the Community Amateur Sports Club (CASC) scheme. But that is a small proportion of the amateur clubs that could qualify. CASC registration is an HMRC (tax office) initiative providing tax advantages; but most sports clubs need further solutions to protect them against risks. For complete assurance, a club should register as Community Interest Company (CIC) or a Guarantee Company and then as a CASC.



 

Follow these links for more details on the benefits of registering your club as a Community Interest Company or a Company Limited by Guarantee.


Community Amateur Sports Club (CASC) Benefits:

  • 80% mandatory business rate relief (sometimes more, at Local authority discretion).
  • The right to accept donations under the Gift Aid scheme (reclaim £28 tax for every £100 donated).
  • Exemption from Corporation Tax on certain levels of trading profits and/or property income.

 

Qualifications for acceptance as a CASC:

  • be a not-for-profit organisation.
  • be recognised by the appropriate sports council.
  • promote participation in amateur sports as a core objective.
  • have non-discriminatory membership policies (be open to the whole community).
  • dedicate any remaining assets (on being wound up) to the sport’s governing body or to another CASC or charity.

 

What Constitutional document can we use?

To be accepted as a CASC, a sports club must have a formal constitution that is binding on the members of the amateur sports association/ club and it’s governing committees. HMRC may allow various types of constitutional document, but particularly mentions “Articles of Association” as an acceptable format. Articles of Association of the kind used to formalise a Community Interest Company meet not-for-profit and social enterprise criteria that are crucial to acceptance as a CASC.

 

What tax reliefs are available to registered CASCs?

CASCs are treated by HMRC as companies for tax purposes so their profits may be chargeable to Corporation Tax. But sports clubs that are registered as CASCs can claim the following tax reliefs:

  • exemption from Corporation Tax on profits from trading where the turnover of the trade is less than £30,000 (prior to 1 April 2004 limit was £15,000)
  • exemption from Corporation Tax on income from property where the gross income is less than £20,000 (Prior to 1 April 2004 limit was £10,000)
  • exemption from Corporation Tax on interest received
  • exemption from Corporation Tax on chargeable gains

 

What legal structures are allowed and what are their advantages and disadvantages?

Unincorporated Association Limited Company
The members “associate” and agree to establish the club with its rules and operating procedures, which become the Constitution of the amateur sports association/ club. This simple form of club structure, which does not have a separate and distinct identity for legal purposes is called an “Association” and is suitable for small local clubs not having significant financial assets, equipment, or buildings and for clubs that have minimal risks, where accidents are less likely and the club feels safe from potential claims for negligence. A Limited Company is a legal entity in its own right and its affairs are separated from the affairs and assets of the Members.  For CASC purposes it is best to register as a Community Interest Company (CIC) “limited by guarantee” in which the members of the company each guarantee to pay a nominal sum (say £10 each) if the company could not meet its obligations.  This is suitable for clubs that own some assets and perceive a level of risk that may be problematic to the members. The club members may vote a committee of a small number of officers to be the guarantors and represent the rest of the membership for operational and legal purposes.
ADVANTAGES:

No registration costs
(CIC registration costs £)

No filing obligations except to HMRC

Club details cannot be seen by non-members

ADVANTAGES:

Limited liability (risks are reduced to an amount that the members can afford).NB limited liability will not protect an officer who acts fraudulently or negligently.

Formal legal structure that meets CASC requirements

Recognised not-for-profit structure that will be acceptable to public funding bodies or other donors

Acceptable legal format for contractual arrangements (e.g. borrowing money or owning property)

DISADVANTAGES:

if someone makes a negligence claim – ALL the members of the association are liable

if the club goes bankrupt, ALL the members may be liable for the debts whatever their financial circumstances.

liability is unlimited

DISADVANTAGES:

Set-up and registration costs (although these are quite small)

Obligation to make Annual Returns and file Accounts

Filed Returns and Accounts are available for public inspection

 

Where can a club register as a CASC?

Applications should be sent to:
Sports Clubs Unit,

Inland Revenue,

Meldrum House,

15 Drumsheugh Gardens,

Edinburgh

EH3 7UN

 

How can a club register as a CIC for the purpose of becoming a CASC?

Ideally, your Community Interest Company should be registered using Articles of Association that are specifically designed to suit an amateur sports club wishing to register as a CASC. Our recommended format allows club members to elect a board of directors who serve voluntarily and may be re-elected on a three-year rotation. The terms of appointment meet the “amateur” requirement stipulated in the CASC rules. If your club wishes to register on these terms you need to complete our Order Form for CIC for CASC purposes. If your club wishes to register as a Community Interest Company, but cannot, or chooses not to register as a CASC you need to complete our Order Form for a regular CIC.

 

What is meant by “Open to the whole community”?

HMRC defines this requirement as:

  • membership of the club is open to all without discrimination
  • the club’s facilities are available to members without discrimination
  • any fees are set at a level that does not pose a significant obstacle to membership or use of the club’s facilities

“Membership” can have different meanings in different contexts and the club may actually have more than one level of membership. The operative requirement is that any person may join the club to take part in its activities and use its resources subject only to reasonable qualifications that do not discriminate against particular members of the community. A club that only accepts players for membership if they have achieved a certain level of expertise would be held as discriminatory. A club that set fees at an excessive level would not meet the criteria. A club that banned people above a certain age, or having a specific race would be unacceptable under the CASC rules.

 

What membership fees can a club charge under CASC rules?

This rule is necessarily open to wide interpretation because of the varying costs of different kinds of  sports and facilities. Fees must be set at a level that does not pose a significant obstacle to membership or use of the clubs facilities. This includes all fees taken as a whole and not just annual subscriptions. HMRC also takes into account charges for using club facilities if they are not included in the fees.

 

How do CASC rules define the word “amateur”?

HMRC state that a club is organised on an amateur basis if:

  • it is non-profit making
  • it provides for members and their guests only the ordinary benefits of an amateur sports club
  • its governing document requires any net assets on the dissolution of the club to be applied for approved sporting or charitable purposes

HMRC would not normally expect a CASC to pay members to play. However, some small payments to some members for playing may be acceptable as long as the object of paying players is to encourage wider participation in the sport. A club which pays players simply to achieve competitive success will not meet the qualifying criteria. An amateur sports club may not pay its directors for their role as directors of the club, but it may make reasonable payment to maintenance, administration and support staff for the work they do.

 

What do CASC rules define as “Non-profit making”?

HMRC state that a club is non-profit making if its constitution requires any surplus income or gains to be reinvested in the club and does not permit any distribution of club assets in cash or in kind to members or third parties. This does not prevent donations by the club to charities or to other clubs that are registered as Community Amateur Sports Clubs’.

 

If CIC is unsuitable for my club what is the alternative?

CIC rules require a clause in the constitution to dedicate residual funds (in the event of winding up) to an “asset locked” body. By this they mean a registered charity or a Community Interest Company. If your sport’s governing body is registered in this way it can be named as the beneficiary under the dedication. If, however, it has a looser form of registration that does not come under such regulation it will not be acceptable to the CIC Regulator. In that case, your option is either to name an alternative beneficiary, such as a charity associated with your sport, or to register your Club in a format that does not have such strict rules. The obvious choice is the traditional “Private Company Limited by Guarantee” format. Either way, HMRC rules state that a Club wishing to have the benefits of CASC registration must include a dedication of residual funds in its legal constitution. The difference is simply the degree of strictness about the nature of the beneficiary.