Community Amateur Sports Clubs: detailed guidance notes

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Contents

1. Introduction

1.1 The Community Amateur Sports Club Scheme (CASC) was introduced in April 2002. This has enabled many local amateur sports clubs to register with the HM Revenue & Customs (HMRC) and benefit from a range of tax reliefs, including Gift Aid.

1.2 This guidance is to help sports clubs and their supporters understand how the scheme works and take advantage of the reliefs available.

1.3 The legislation can be found in CTA 2010 Part 13 Chapter 9. Unless otherwise stated all references relate to this chapter of the Act.

1.4. FA 2010 Schedule 6 Part 3 introduced changes to the conditions of the scheme with effect from 6 April 2010.

2. What kind of club can register as a CASC?

2.1 Sports clubs must be formally constituted so that the conditions of the scheme become binding on the members and their governing committees. This means that clubs wishing to apply for CASC status will need to look carefully at their constitutions to make sure these fit in with the CASC requirements before they apply to HMRC.

2.2 Your club can use any form of constitution such as a set of rules or a memorandum and articles of association but it must be formally adopted by the members to be acceptable.

2.3 The conditions for becoming a CASC are fairly easy to meet. Your club must fit in with these in practice as well as having these as requirements in the club rules. Your club must:

  • be open to the whole community
  • be organised on an amateur basis
  • have as its main purpose providing facilities for, and promoting participation in one or more eligible sports
  • meet the location requirement
  • meet the management condition

2.4 Where your club has been operating for some time it is usually easy to show how it meets these conditions. Newly formed clubs might find it more difficult because we need evidence of how your club is operating before we can register it as a CASC.

2.5 If your club is a multi-sports club you should refer to Annex 2 - Multi Sports Club that provides further guidance on the types of structure that may qualify for CASC status.

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3.Open to the whole community

3.1 A club is open to the whole community if:

  • 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

3.2 Being open to the whole community for a members club with limited facilities does not mean literally open to everyone because clubs would be unable to carry out their objectives of providing facilities for and promoting participation in eligible sport which is also a requirement of the scheme. Open to the whole community means that a club can limit the number of members based on the availability of facilities. But this must be done on a fair and equitable basis. This is why the word discrimination is used in the definition of the term open to the whole of the community.

3.3 The first condition (membership of the club must be open to all without discrimination) can be split down to its component parts.

a) Membership of the club must be open to all without discrimination.
b) Facilities of the club must also be available to members without discrimination.
c) Any fees set at a level that does not pose a significant obstacle to membership or use of the clubs facilities.

The first condition split down to its component parts.

  • membership of the club
  • must be open to all
  • without discrimination

3.4 To be a member of a club a person must be party to the contract which is the club's constitution. This is clear when the club is a company - members of companies are those who have the right to vote at general meetings. Most members clubs in the form of companies are limited by guarantee and the terms of membership are usually clearly defined in their constitutions. These will usually say that each member upon joining is entitled to a single vote at general meetings.

3.5 Companies limited by shares are different because voting rights are determined by the number of shares held. In the case of members clubs we would expect to see an equal shareholding for each member but this is quite difficult to achieve where members come and go. It can be done by making sure that each member on joining is allocated a single share and that this is reallocated upon leaving.

3.6 Most members clubs are unincorporated associations which unlike companies have no legal personality. In these cases membership rights are those which exist under the contact between members. Full membership is determined by the members' rights. Our view is that membership of a club must mean full membership. Clubs are able to establish different classes of membership and the Act refers to six classes of membership. But the word 'membership' is used in different contexts in different subsections. If we take the same meaning of 'membership' in both subsections the legislation becomes difficult to understand.

3.7 We have legal advice to support the position that membership in subsection 1 (a) means full membership with voting rights. The case in question considered whether a club was discriminating against different classes of member by only permitting players who had achieved a certain level of expertise to become full members with full rights including the right to vote at general meetings. The club was therefore discriminating against these lesser classes. It's acceptable for clubs to provide for other classes of membership but these other classes must have the choice of whether to become full members with voting rights or to be a different class of member with fewer rights.

3.8 The term 'different classes of membership' means as it says something different than full 'membership' because the word membership has legal rights and obligations which the 'different classes of membership' do not have.

3.9 The first different class mentioned in subsection 5 is the age of the member. It would not be acceptable for a club to offer a different class of membership to persons over 65 and not permit them to have full membership with voting rights. This would be clear age discrimination. Nor would it be acceptable for a club to provide for a different class of membership for unemployed persons and not permit them to have full membership? This would be discrimination on the grounds of financial position.

3.10 The term 'different classes of membership' means just what it says classes which are different from full membership. And the word membership in subsection 1(a) means full membership for the legislation to have any proper meaning. So for a club to be registered as a CASC its full membership must be open to the whole community.

3.11 Being open to all for a members club means that the facilities are available to the members so the club can fulfill its primary objectives. HMRC's view is that the words without discrimination add to the requirement of being open to all. A club must be open to all and without discrimination. Discriminating against other groups is generally unacceptable and often generally unlawful.

3.12 HMRC's CASC requirement of being open to all should not be confused with the general law discrimination act. For example a club which insists on prospective members passing an interview at which they must agree to carrying out services to support the club might not involve discrimination against any group of people and might be within the general law on discrimination. But such a club would not be not open to all. The words without discrimination do not make a club more open than it is. In the above example membership is open to everyone who is prepared to carry out services for the club. It is not open to those who will not or cannot carry out these services. The club does not meet this requirement.

3.13 The final part of the condition 'without discrimination' underlines that in dealing with membership issues a club must act without bias of any kind. Subsection 2 provides further explanation of what discrimination includes. But this is not a limitation on the forms of discrimination. It would have been easy to limit this term had this been intended. Limitations are made in other parts of Chapter 9 for instance in the definition of the ordinary benefits of an amateur sports club at Section 660(4).

3.14 The wording in the description of types of discrimination says 'includes in particular'. This means that the list is not exhaustive. Any form of discrimination whatever the nature regardless of whether this is specifically mentioned would mean that a club fails to meet this requirement.

3.15 Being open to the whole of the community includes the availability of facilities and the cost of joining the club so as to use the facilities.

The term facilities of the club means those facilities the club is required to provide under its constitution. There is no difference between making facilities available and providing facilities. These terms are interchangeable. This means for example that a club should not discriminate between full members when it comes to the use of the clubs tennis courts, football pitches or swimming baths. This is important when there is a team structure within a club which differentiates between members on the basis of ability.

3.16 HMRC takes a common sense approach. Clubs have limited numbers of tennis courts etc available. All the members cannot use these at the same time. But the facilities must be allocated on a just and reasonable basis. Taking an extreme example we would not expect a cricket club to restrict the use of its main pitch to the first team allowing less skilful players to use the ones of lower standard.

3.17 The description of discrimination is divided into two parts. This is not a definition but just some examples of the things that are included. The first description includes ethnicity, nationality, sexual orientation and religion or beliefs. So all types of discrimination are included but these are mentioned in particular.

3.18 Further types of discrimination are then mentioned. These are sex, age or disability 'except as a necessary consequence of the requirements of a particular sport' This means for example where a sports governing body imposes restrictions for safety reasons etc for instance on the age for participation HMRC would accept that a club in following these restrictions would not be discriminating against anyone. Most representative bodies encourage participation at all ages provided proper steps are taken by the individual clubs. Some clubs find this requirement difficult where the sport is potentially dangerous but the problem is usually the way the club is organised not the requirements of the sport.

3.19 Clubs can refuse or revoke membership, on non-discriminatory grounds, where the membership, or continued membership of the person concerned would be likely to be contrary to the best interests of the sport or the good conduct and interests of the club. These are internal matters for the club. HMRC will not become involved in such internal issues. Provided the club has acted openly following its CASC compliant constitution there should be no effect on the clubs CASC status.

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4. Level of fees

4.1 Clubs vary in nature. For example a small football club using hired pitches at one extreme and a large golf club maintaining two courses at the other. Golf is an eligible sport as is football but there are necessary costs which have to be incurred to provide facilities for playing golf which do not occur with some other sports.

4.2 Any 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. Some clubs charge an initial joining fee which may be as much as double the annual subscription. These must be considered as well. HMRC also take into account the charges for using the facilities if these are not included in the fees. Some clubs charge a lower annual subscription but charge members when they use facilities. There is also the cost of specialist equipment to bear in mind. This can be an issue where the sport involves expensive kit such as for sailing clubs and horse riding clubs.

4.3 Clubs involved in very expensive sports that want to register as CASCs need to be able to demonstrate that membership and participation is within the financial reach of the wider community. This might be achieved by using other income to cross-subsidise fees or by the club making club-owned equipment available for use by members at reduced rates.

4.4 Example. Dinghy sailing does not require significant wealth, but even a basic second-hand boat and safety equipment can cost several hundred pounds. If a club required all members to own their own boats this would present a significant obstacle to membership for many people. However, if the club made a boat and equipment available to members for hire at modest rates this obstacle would be removed.

4.5 HMRC takes a common sense approach. Most clubs make sensible provision for non boat or horse owning members to have easy access to hire these. Provided that these costs are affordable there would be no problem in accepting that the fees are not an obstacle. Each club has to be considered on its merits. Some clubs charge significantly more than others but this often depends on geographical location and the costs the club have to incur in providing the facilities. It is acknowledged that unwaged persons might well find it very difficult to join certain clubs but provided the club make realistic efforts to accommodate people on lower incomes it is acceptable for them to charge waged persons relatively higher fees.

5. Organised on an amateur basis

5.1 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

5.2 Non-profit making

5.3 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'.

5.4 There are many other uses of the term 'non-profit making' used for various purposes, for example for VAT, the term is used to determine eligibility to certain reliefs. But the CASC definition is specific to CASC status. A club will only meet this condition 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. A club which meets this condition will not necessarily be non-profit making for other purposes.

5.5 A club should provide for members and their guests only the ordinary benefits of an amateur sports club.

This is covered at Section 660(4) and (5) and restricted to the following list:

  • provision of sporting facilities
  • reasonable provision and maintenance of club-owned sports equipment
  • provision of suitably qualified coaches
  • provision or reimbursement of the costs of coaching courses
  • provision of insurance cover
  • provision of medical treatment
  • reimbursement of reasonable travel expenses incurred by players and officials travelling to away matches
  • reasonable provision of post match refreshments for players and match officials
  • sale or supply of food or drink as a social benefit which arises incidentally from the sporting purposes of the club

5.6 Some of the benefits include the word reasonable. This means that clubs should not provide excessive levels of benefits. For example only the reasonable cost of travelling to and from away matches is allowable. There is no mention of personal expenses for example hotel accommodation or meal allowances. Whether the cost is reasonable should be considered realistically for each sports club. Would it be reasonable for a club to hire cars for each first team player to travel to matches? Or would it be more reasonable to provide a mileage allowance or to cover the cost of travel on public transport?

5.7 There is guidance on members' expenses for general purposes produced by some sports governing bodies providing guide lines for clubs wishing to maintain amateur status. Such rules should not be confused with the CASC status conditions. These often include things which would not be acceptable as the ordinary benefits for a CASC.

5.8 The supply of food and drink should only be ancillary to the sporting purposes'. This clearly means that the supply of food and drink generally as a benefit of membership is not acceptable.

5.9 The conditions about benefits are dis-applied in certain circumstances. These do not prevent a club from entering into agreements with members for the supply of goods and services or from employing and paying remuneration to staff who are members provided the terms are agreed by the committee on an arms length basis without the members becoming involved. This means that clubs can continue to pay for work to be done or goods to be supplied on either a self-employed basis or by employing members as staff. Examples would include catering services, bar work, coaching and ground work.

5.10 Example 1. A cricket club pays a member for his services as a groundsman. The rates of pay are reasonable and negotiated at arms length. This would be acceptable.

5.11 Clubs may wish to arrange prize competitions where the nature of both the competition and the prize is such as to promote participation in the sport. In strictness there is nothing to permit this but where the value of prizes, are commensurate with amateur participation in the particular sport these would not prevent club from being registered. Competition prizes of sufficient value to attract professionals or such frequency that could be equated with payment to players would preclude qualification as a CASC.

5.12 Example 1 A Cycling club promotes races in which members and others, particularly local juniors, are encouraged to participate. Modest cash prizes are awarded and funded from entry fees and local sponsorship. This would be acceptable.

5.13 Example 2 A Golf club holds regular competitions for members throughout its season. Although individual events may be limited by gender or handicap, all members are able to participate in some of the competitions. Prizes of golf equipment, for example bags, shoes, balls or vouchers redeemable at the club shop are awarded. Again, this would be acceptable.

5.14 Example 3 A Bowling club organises frequent competitions for club members with cash prizes subsidised by a brewery. Senior players derive significant benefit from these arrangements. A club that subsidised its members in this way would be unlikely to qualify as a CASC.

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6. Application of assets on dissolution

6.1 A club's constitution must provide for any net assets on the dissolution of the club to be applied for approved sporting or charitable purposes. The net assets of a club means what is left after paying debts and meeting other legally payable liabilities.

6.2 Approved sporting or charitable purposes means any one of three purposes that may be approved in a general meeting of the club or determined by the members of the club's governing body. The governing body for the club means its management committee. The three options are:

  • the purposes of the sport's governing body for use in the related community sport, for which the club existed
  • the purposes of another CASC
  • the purposes of a charity

6.3 The purposes of the sports governing body is restricted because most governing bodies have wider purposes than the community amateur clubs they represent.

6.4 The purpose of another CASC means a registered CASC. Some clubs allow for distributions to other sports clubs with similar objects. This is not acceptable. A club with similar objects might fail the CASC requirements for other reasons such as its own dissolution clause. HMRC have legal advice which confirms that this means a registered club and not a club similar to a registered club.

6.5 The purposes of a charity means any body of persons or trust established for charitable purposes only. The requirement is not met unless the distribution is restricted to a charity and not some similar company or associations as this might not have charitable status. Even small, seemingly innocuous, departures from this precise wording such as 'charitable or benevolent purposes' may mean that this requirement is not met.

6.6 The following examples would be unacceptable for a CASC

  • provision for the assets to be divided amongst the members
  • no provision at all for the assets on dissolution
  • provision for assets to be given to non-charitable or not for profit organisation
  • provision for the assets to pass to what the club deems to be an approved sporting body

6.7 HMRC has no objection to a club having a dissolution clause that provides for repayment of any unspent grant to be made to a grant making body, where this was a condition of the original grant.

6.8 Once the contractual obligation to repay any unspent grant had been met the residual surplus must be applied for approved sporting or charitable purposes as outlined above.

7. Main purpose

7.1 The main purpose of the club must be to:

  • provide facilities for
  • encourage participation in one or more eligible sport

This is quite similar to the version acceptable for charities. 'The promotion of community participation in healthy recreation by providing facilities for playing particular sports'.

7.2 This is covered at Section 658 (1)(a) - open to the whole community. HMRC rely on Sport England for the definition of eligible sport.

7.3 To become a CASC it's not enough to provide facilities. A club must also promote participation in an eligible sport. Small football clubs for example sometimes use facilities provided by the local authority. Some cycling clubs simply meet up and go riding together. HMRC take a very wide view of the meaning of providing facilities. These don't have to be owned by the club they might hire these. Other clubs which simply organise facilities so that these become available could qualify.

7.4 HMRC do not accept that the provision of facilities itself amounts to the promotion of participation in sport. Providing facilities is not sufficient. Clubs should encourage all members to participate regardless of ability. It's not enough to provide facilities and encourage a small number of members who are sports enthusiasts to take part. The emphasis must be towards as many members as possible taking part. This rarely is a problem. Most clubs are structured in ways that cater for all abilities.

7.5 Some clubs will not qualify where there are a high proportion of social members. Many clubs have social members but where the majority take no active part in the sport we would say that the club is failing in the basic principle of encouraging participation. HMRC accept many forms of participation. Umpiring, refereeing or helping to prepare a court or pitch would all fit the bill. So in sports which require physical strength members can still participate even though full participation in the sport might be too demanding.

7.6 The club's emphasis must be on encouraging all members to participate regardless of their ability. A club might field a number of teams, ranging in ability from novice players to a high competitive standard. This is acceptable as long as the overall emphasis is on participation. A club that only allows participation at an elite level with other members being spectators rather than players would not be acceptable.

Certain classes of members, such as family members, who have joined in furtherance of the sporting activities and not primarily to enjoy social benefits, might also be included.

7.7 There is no hard and fast rule about numbers of social members but HMRC use a rule of thumb. Where over half do not participate then the club is most likely not encouraging its members to do so. It would then be up to the club to demonstrate the things they do and to explain why so few take part. Sometimes social clubs look very similar to sports clubs.

7.8 Some have the main purpose of providing leisure facilities but it is not sufficient for these clubs to alter their constitutions to include the CASC objects. Principally these clubs are places for people to meet for social purposes even though some sporting activities take place.

7.9 HMRC accepts that some social clubs provide sporting facilities and that establishing teams help some members to participate in sport. But this is not enough. A club must be able to demonstrate that it has the promotion of participation in eligible sport as its main purpose not that it does it as well as running a social club.

7.10 The club's governing document must make it clear that this is the club's main object. That does not rule out the club having social members, but HMRC would expect the substantial majority of the club's activities to be directed at furthering the main object. Where a club's social activities are disproportionately large, that might call into question whether the club meets the main purpose requirement. This might be the case where only a minority of the club's members actively participate in the sport concerned.

7.11 Certain clubs are structured in ways that make it difficult for them to qualify. Sometimes there are a number of separate clubs all using the same grounds and club house. Where there is a separate body running the facilities on behalf of the clubs this body will struggle to demonstrate that it is itself promoting participation in sport.

7.12 More information is provided in Annex 2 below. This recognises the problems that promoting participation in sport poses for clubs with different forms of structure. The important thing is that the club that owns the facilities must also be a club which fully satisfies all the conditions. So it can’t simply provide the facilities for the other clubs it must also be a proper sports club encouraging participation for all its members. The fact that it also allows other clubs whether registered or not as CASCs to use the facilities as well does not prevent it from being a CASC as long as its main purpose is to provide facilities for its own members and to promote participation for these members.

7.13 Eligible sports

Eligible sports are defined by Treasury Order, by reference to the Sports Councils' list of recognised activities. The list can be accessed at Sport England - Which sports do we recognise?(Opens new window)

The list of sports as at July 2002 is at Annex 1 (PDF 9K).

HMRC cannot consider applications from clubs whose sport is not on the Sports Councils' list. Any requests for new activities to be added to the list should be addressed to the Sports Councils, not to HMRC.

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8. The location condition

8.1. FA 2010 Schedule 7 Part 3 added new conditions for eligibility as a CASC. The location condition has been added to make it clear that the CASC scheme is open to qualifying sports clubs in other European Community Member States or relevant territories.

This condition is met where a club:

  • is established in a Member State or relevant territory
  • provides its facilities in a single Member State or relevant territory

The meaning of relevant territory is the same as that used for charities in FA 2010 paragraph 2(3)(b).

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9. The management condition

9.1. This is the second of the new conditions for eligibility as a CASC added by FA 2010 Schedule 7 Part 3. This condition is met where a club has managers that are fit and proper persons to be managers of the club. Club managers mean persons having the general control and management of the administration of the club.

9.2. HMRC may treat the management condition as having been met where they consider that any failure to meet this has not prejudiced the purposes of the club or where it is just and reasonable in all the circumstances for the condition to be treated as met throughout the period during which the condition is not, strictly, met.

9.3. Guidance explaining how HMRC will apply this test can found following the link below.

Guidance on the fit and proper persons test

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10. Registration and termination

10.1 A club that applies to HMRC to be registered as a CASC must be registered if HMRC is satisfied that it is entitled to be. HMRC has no option other than to register a club once an application is made if satisfied that the club is 'entitled'. This takes away any discretion in the process and locks HMRC and the club into a process. This is important because it means that once a club has applied it must go through with the process and so must HMRC. Your club may not withdraw its application and HMRC is required to follow the process to make a decision one way or another.

10.2 HMRC will not generally deal with an application by asking you for more information or suggesting amendments to the constitution without following this through to making a decision. Where you decide not to go through with the club's application there's no provision for this to be withdrawn. HMRC must make a decision based on the facts. Where there is insufficient information provided they may simply refuse the application. HMRC's decision on a CASC application is an appealable decision and is covered in more detail at 8.10 below.

10.3 HMRC must be satisfied that a club is entitled to be registered before it can be accepted. This links the registration process to the conditions. The word 'entitled' connects the requirements of the scheme to the process of being registered as a CASC. It's important to see how this links in to demonstrate why HMRC is unable to register clubs that fail to meet the conditions.

10.4 HMRC, once satisfied with the application, has discretion to specify any date for registration even where this is before the date of the application. Where a club has met the requirement of the scheme since inception HMRC could in theory register it from 1 April 2002. Some clubs were registered from this date when the scheme first came in but it is now very unlikely to happen because HMRC need be satisfied that the requirements were being met at that time. The constitution might be in order but HMRC also need evidence that in practice all the conditions were being met as well. HMRC's practice is to register a club from the beginning of the accounting period in which the application was made where satisfied that all the scheme requirements were met upon application.

10.5 Where a club submits an application then has to make amendments to its constitution to meet the scheme requirements HMRC usually use the date the members adopted the revised rules as the date of registration. So even where there is some delay in informing HMRC about the changes they usually backdate the registration to the date of the general meeting once acceptable evidence has been provided such as minutes of the meeting.

10.6 Where it appears that a CASC is not entitled to be registered or is no longer entitled to be, HMRC may terminate the clubs registration. HMRC may choose the date for deregistration. They must notify the club accordingly of the decision. In practice HMRC will write to the secretary of the club. There is no other provision for a club to be removed from the CASC register. A club cannot simply ask to be removed.

When a club ceases to be a registered CASC a charge to Corporation Tax would normally arise. This is because the CASC rules deem the club to have disposed of its property and reacquired everything at market value. Also any earlier capital gains represented by the property come into charge. For this reason it is important for club members to fully understand what CASC status means. If they have one eye on selling off the ground for development and sharing the profits then CASC status is not an option.

10.7 HMRC publishes on its website a list of all registered clubs so that donors and other third parties, such as local authorities may check if a club is a registered CASC. The list is updated every month. There are special powers to allow this.

10.8 HMRC can de-register a club from any date of choosing so it would be possible to choose the date of registration so that the club would be treated as if it had never been a CASC. In practice this is only likely to happen where a club has deliberately set out to deceive by providing false information in its application. A club can appeal against this decision and the tribunal may direct HMRC to take a different date so as to protect the club from unreasonable dates being used.

10.9 HMRC must be satisfied a club is eligible by reference to the conditions of the scheme. Where a club does not provide information to help HMRC come to a decision on CASC status HMRC can simply refuse the application. This rarely happens because clubs are eager to satisfy the requirements to get the reliefs. There are other general provisions for requiring information relating to checking a tax position which would also apply to CASCs. This is so even where a club has no Corporation Tax liability for the period in question because CASC status is itself a gateway to tax relief and HMRC is entitled to check this status is correctly held.

10.10 Section 671(4) and (5) refer to an appeal against HMRC's decision. A club may not refer an appeal to the Tribunal which is the new equivalent of the Commissioners until the appeal has been made to HMRC. The appeal must be in writing to HMRC in 30 days of the notification and must state the ground of appeal. Most CASC appeals are made on the grounds that the clubs don't like the decision not because they think the decision is actually incorrect. Some clubs prefer to appeal rather than do the things necessary to fit into the scheme but HMRC can only reverse a decision where satisfied that the club is entitled to be registered. In practice most appeals are withdrawn when HMRC explain that the club may apply again once they have done the things they need to do.

10.11 A club may put forward any additional grounds of appeal provided the original omission was neither wilfull nor unreasonable. The Tribunal may (if they do not dismiss the appeal) direct HMRC to register a club from a specified date or ask them to reconsider the matter where this relates to an application. So this allows a club to be registered from an earlier date than the one chosen as well as allowing the Tribunal to direct HMRC to register a club they had refused to accept.

10.12 On termination the tribunal may again reverse a decision and put the club back on the register or change the date of termination. There is also the provision for the matter to be passed back for reconsideration. The usual appeals provisions apply as they do to any tax appeals.

10.13 CASCs can appoint tax advisers to deal with HMRC regarding their tax affairs. Fill in and submit Form 64-8 'Authorising your agent' to give HMRC authority to communicate with your agent about the tax affairs of your organisation.

Post your completed form to HMRC Charities at this address

HM Revenue and Customs
CASC New Cases
PO Box 205
Bootle
L69 9AZ

11. Are CASCs charities?

11.1 A registered CASC cannot be recognised as a charity for tax purposes. However, it is open to any sports club which is not a registered CASC to apply to the Charity Commission or other charity regulator to be registered as a charity as an alternative. Clubs proposing to seek charitable status should not apply for CASC status. Where HMRC are satisfied that a club is entitled to be registered they have no option but to register upon receiving an application. Where for example a club makes an application to be a CASC having already been registered as a charity HMRC would have to register the club if satisfied that it meets all the requirements of the CASC scheme. This would mean that the club would no longer be entitled to be a charity under CA 2006.

Charity Commission - CC21 - Registering as a Charity (Opens new window)

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12. The tax reliefs for registered CASCs

12.1 CASCs are companies for tax purposes so their profits may be chargeable to Corporation Tax.

12.2 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

12.3 The exemptions are reduced where clubs have been registered for just part of the relevant accounting period.

12.4 Trading income

12.5 Where a club is a CASC for all its accounting period and its turnover from trading is less than the limit the whole of the profit is exempt provided this is applied for qualifying purposes. Where a club's accounting period is less than 12 months the limit is correspondingly reduced. For example an eight month accounting period would get a limit of £30,000 x 8/12 = £20,000. The exemption is subject to a claim being made to HMRC. Section 662(5) apportions the relief where a club only has CASC status for part of an accounting period. The effect is that the club is treated as having two separate accounting periods so both the income and the limit are proportionately reduced.

12.6 For example a club registered for eight months of its accounting period showing turnover from trading as £32,000 would bring into account £21,333 and the limit would be £20,000 so nothing would be exempt. The trading income must be potentially chargeable to tax before this applies. This means that income which is not chargeable should be ignored for working out. Sports clubs receive a lot of their income from members which is not considered to be assessable trading income. So to arrive at the right figure clubs need to know which part of their income is chargeable and which is not. And this means that they need to keep records to enable them to identify these elements. This is shown in the example below.

12.7 A club provides tennis courts for members and non members. It runs a bar and allows members and non members alike to hire function rooms. The club must be able to differentiate between the transactions with members and its trading income. The non trading income would be the receipts from members:

  • for use of sports facilities
  • for using the function rooms/catering
  • from the bar

The trading income would be receipts from non members:

  • for use of sports facilities
  • for hire of using the function rooms/catering
  • from the bar

12.8 Where a club has a fairly high turnover it might still be exempt provided the proportion relating to non members is not so high. It is important for clubs to record this properly because there is just one turnover limit which applies to all the various activities. Unless clubs properly monitor their trading income they will not be able to tell when they become liable to Corporation Tax and so need to make a return of income. The exemptions must be claimed and only for income which is applied for qualifying purposes.

12.9 Gift Aid and interest

12.10 There are no limits to these exemptions. But interest income is apportioned as if there are separate accounting periods where a club is only registered as a CASC for part of the relevant period. Gift Aid income is the same as for charities except that membership subscriptions may not be treated as gifts.

12.11 Property income

12.12 This exemption applies to rental income subject to a limit of £20,000 which is apportioned in exactly the same way as for trading income for shorter accounting periods etc. Again it must be claimed and relates to income applied for qualifying purposes. It doesn't matter who rents the property it's still chargeable. Rental income from both members and non members is taken into consideration.

12.13 Chargeable gains

12.14 Section 665 treats gains as not chargeable provided the whole of the gain is applied for qualifying purposes and the club makes a claim. The term qualifying purposes essentially means for doing what a CASC is set up to do - provide facilities for and promote participation is eligible sport. HMRC only allow clubs into the Scheme which are required by their rules to apply all their funds for these purposes so this rarely causes a problem. HMRC receive a number of queries from clubs seeking to dispose of surplus land. Sometimes clubs seek to share in the profits of developing the land. In these cases the transactions might not be covered by the chargeable gains exemption because the activity might amount to property trading.

12.15 In most cases clubs want to maximise the fund available to provide the best possible facilities for members. There is nothing to prevent a club selling all or part of its land so as to provide better facilities even where this means relocating. Clubs can continue to provide facilities for and promote participation in sport during the transitional period by coming to arrangements with other clubs for their members. In most cases such gains wouldn't become immediately chargeable on clubs because of the provisions that apply to the rolling over of gains on assets used by clubs. So provided the whole of the gain is used to provide assets used for the same purposes the gain will simply roll over until the new assets are disposed. For most members clubs which continue to provide faculties for members this may never happen.

12.16 HMRC has specialist advice about the interpretation of the whole of the gain. The whole of the gain means the whole of the proceeds. HMRC's view is that it is impossible to say which part of the proceeds relate to the initial cost and which relate to the increase in the value. Each pound will be partly made up of some of each so that if anything is applied for a purpose which is not a qualifying one then the whole of the gain would not have been applied for qualifying purposes.

13. Non qualifying expenditure

13.1 Section 666 provides the rules for reducing the exempt amount where a club incurs non qualifying expenditure. It applies where income has been exempted under the CASC rules and the club incurs expenditure for non qualifying purposes in its accounting period. The term 'qualifying purposes' is defined broadly as meaning the provision of facilities for and promotion of participation in eligible sport. Non qualifying purposes is everything other than this.

13.2 Where the non qualifying expenditure is at least equal to the total income and gains for the accounting period the exempt amount is reduced to nil by Section 666(6)

13.3 Where the non qualifying expenditure is less than the total income and gains for the accounting period the exempt amount is reduced by the following fraction:
RIRG - (NQE·IRCG)

This means that the potentially exempt amount (RIRG) is reduced by multiplying it by the fraction obtained by dividing the non qualifying expenditure(NQE) by the total income and gains for the period(IRCG).

So in an example a club has interest of £1,000 and subscription of £10,000. Its total income is therefore £11,000. Most of the income is spent on providing facilities for members (£10,000) but £1,000 is misspent. The formula works as follows:

£1,000 - (£1,000/£11,000) = £91
So the exempt amount is £1,000 - £91 = £909.

13.4 The aim is to allow a proportion of the total exemption based on the proportion of the total that has been applied for qualifying purposes. Where a club spends as much as or more than it gets in from all sources on non qualifying purposes the whole of the exemption is reduced to nil for the year and non-qualifying expenditure is carried back to earlier periods.

13.5 There are provisions to allow clubs to nominate which income or gains they wish not to be exempt and also provisions for HMRC to assess earlier periods where we have carried back non qualifying expenditure.

13.6 here are a few more examples:

Example one. CASC One runs a trade with turnover of £20,000, has rental income of £15,000 and interest of £500. All of the income is applied for qualifying purposes. The trading turnover and rental income is below the relevant limits. All the income is applied for qualifying purposes and is consequently exempt from tax.

Example two. CASC Two runs a trade with turnover £40,000, profit £6,000. Because the turnover exceeds the £30,000 limit the profit is taxable at the appropriate Corporation Tax rate.

Example three. CASC Three lets part of its premises to other organisations and receives rental income of £18,000 per annum. Its accounting period ends on 30 June and it obtains registration as a CASC with effect from 1 December 2004. The property income for the period 1 December 2004 to 30 June 2005 will amount to £10,500 (£18,000 - 7/12). The exemption is also reduced proportionally but, as the limit is £11,666 (£20,000 - 7/12), the income of £10,500 for the first CASC period of registration will be exempt.

Example four. CASC Four is entitled, in a particular accounting period, to exemption on the following sources of income:

  • bank interest = £6,000
  • income from property (gross) = £5,000
  • Gift Aid income (gross) = £15,000
  • total = £26,000

The club also has income of £5,000 membership fees.

During the accounting period the club spends £7,000 on a non-qualifying purpose. The calculation of the reduction of income, which is available for relief is as follows:

£26,000 - (£7,000/£31,000) = £5,870

So instead of £26,000 being exempt only £20,130 is covered by the exemption and the amount of £5,870 is taxable. In practice HMRC will generally determine which source of income is brought back into charge to Corporation Tax. However, the club can, within thirty days of being notified of the adjustment, specify which income or gains it wants brought back into charge As CASC Four has no other taxable income, the income of £5,870 is charged at the appropriate Corporation Tax rate.

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14. Reliefs for donors

14.1 There is a range of tax reliefs to encourage individuals and companies to support CASCs. Individuals can make gifts to CASCs using the Gift Aid scheme (see below). Individuals can include the gross value of Gift Aid donations to CASCs when making a Tax Credit application or, when computing age related personal allowances. Individuals can obtain relief from Inheritance Tax for gifts to CASCs. Gifts will not form part of the donor's estate for Inheritance Tax purposes, in the same way as gifts to charity.

14.2 Businesses that give goods or equipment that they make, sell or use get relief for their gifts. They do not have to bring any disposal amount into account, but can still obtain relief for the cost, for tax purposes.

14.3 Gifts of chargeable assets to CASCs by individuals or companies are treated as giving rise to neither a gain nor a loss for capital gains purposes. There are rules to prevent the exemptions for CASCs and the donor reliefs being used for tax avoidance purposes.

14.4 Gift Aid

14.5 Individuals who are UK taxpayers can make gifts to CASCs using Gift Aid in the same way as they can make gifts to charities. Relief is available for gifts made to a registered CASC after 6 April 2002. Gift Aid is only available for gifts to CASCs and not for other payments such as membership subscriptions.

14.6 A CASC can reclaim basic rate tax on donations made by individuals, whether large or small, regular or one-off - provided the conditions for the Gift Aid scheme are satisfied. In particular, the CASC will have to be able to show an audit trail from the donation to a donor who has given a Gift Aid declaration that covers that donation.

14.7 The rules of the Gift Aid scheme for individuals, as they apply to charities, also apply to registered CASCs (but remember, a CASCs membership subscriptions are not eligible as Gift Aid payments). You can find more information by visiting the guidance notes on the Gift Aid scheme.

Chapter 3 Gift Aid - guidance notes on the Gift Aid scheme

14.8 Gifts made using Gift Aid are treated as having been paid after deduction of basic rate Income Tax. As long as the CASC applies the income for qualifying purposes it can claim repayment of this tax from HMRC Charities (at present 25p for each £1 donated (while the basic rate of Income Tax remains at 20 per cent) This is topped up by 3p transitional relief until 5 April 2011.

14.9 If the donor pays tax at the higher rate they can claim additional relief in their Self Assessment tax return. All they need to do is enter the amount donated to the CASC in the Gift Aid box on their Self Assessment tax return.

14.10 The main difference is that for CASCs membership fees are not gifts for the purposes of this section. Also there is no relief for company donations as there is for charities. This means that CASCs cannot use controlled companies in the way charities do to plan their affairs so as not to pay Corporation Tax on trading profits.

14.11 Apart from these differences Gift Aid works in exactly the same way as for charities. There is a long tradition of giving in relation to charities in the UK but people join sports clubs for different reasons than they become associated with charities. Usually members of CASCs join to use the facilities so there isn't the same altruistic intention as there is when someone 'joins' a charity.

14.12 Some clubs recognise the potential for raising funds by encouraging donations. The CASC rules make it clear that membership fees are not gifts for the purposes of the Act. This is because nearly all club members would have personal use of facilities. As for charities where donors have personal use of facilities relief is denied. It is however possible for clubs to use Gift Aid provided they go about this the right way.

14.13 There is nothing to prevent a club from seeking donations provided that this is not just a way of paying subscriptions. In other words HMRC would expect a club to be able to carry on its objects of providing facilities etc for sporting members without the donations and they would also expect members who chose not to make donations to have the same rights over the use of the facilities as those who do.

14.14 HMRC would be likely to object where a club reduces its fees significantly and requests an additional donation unless it was clear that this was in reality a free will gift and no measures were taken in respect of those who chose not to pay. The benefit rules of course apply in the same way as for charities so HMRC would also need to be convinced that the benefits derived from being a member of the club were not received as a consequence of making the donation. Clubs sometimes charge a minimal annual subscription and then additional fees when members use the facilities. For example it might cost £50 a year to be a member of a squash club but members still have to pay £10 each time they use the courts.

14.15 This doesn't mean that that the annual £50 is allowable for Gift Aid. Clubs may argue that the £10 a court covers the cost of using the facilities so the annual fee is allowable. HMRC would be unlikely to accept this. Firstly in most cases non members have to pay more than the £10 charged to members which indicates that the annual membership fee is part of the members' fees for use. Sometimes non members cannot use the facilities or may only use these when not required by members.

14.16 This demonstrates the nature of the membership fees. But even where non members can use the facilities on equal terms to members this still doesn't mean the members' annual fees are acceptable for Gift Aid purposes. This is because each member is legally entitled to the things detailed in the constitution. This is a legally binding contract between members of the club. Also the discounts would be benefits.

14.17 HMRC only registers clubs which have as their main purpose the provision of facilities for members and this must be clearly required by the clubs rules. So when a member joins he/she is effectively entering into a contract with the provision of sports facilities being the main thing the member is entitled to. Usually the rules say how the funds are to be raised to enable the club to carry on its main objective. Most clubs' rules say that membership fees can be charged subject to annual review. This will usually be sufficient to connect the fees to the provision of the facilities under a legally binding contract.

14.18 Even where this is not clearly stated there is still probably sufficient support for taking the same position because all CASCs have non profit making clauses in their rules which will say that funds must be used solely for the club's main objects. The money has to be applied for providing facilities for members regardless of how it is received. If it is received under Gift Aid it must still be used for the members. This is clear to the members when the donation is made because the donor has already contracted for this to happen. So the constitution of a club connects members' fees to the provision of facilities.

15. Non-domestic rates relief for CASCs

15.1 For CASCs in England and Wales Section 64 of the Local Government Act 2003 provides the same relief that would be available to a charity (80 per cent mandatory relief) where the CASC property is wholly or mainly used for the purposes of that club and of other such registered clubs. With effect from 1 January 2006, CASCs in Scotland, became entitled to the same mandatory 80 per cent rate relief. In Northern Ireland relief is available under Article 31 of the Rates (Northern Ireland) Order 1977.

15.2 HMRC does not administer this relief and therefore requests for advice on non-domestic rates you will need to contact your Local Authority Finance Department.

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Annex 2

1. Multi sports clubs

1.1 Some sports clubs provide facilities for and promote participation in more than one sport. These 'multi-sports' clubs can be structured in a number of different ways. They are usually unincorporated associations or companies limited by guarantee, with a management committee or board of directors (referred to below as 'MC'). Clubs are free to organise as they see fit but not all of the different structures will qualify for CASC purposes.

2. Examples of multi-sports clubs that may qualify as CASCs

2.1 Integrated single entity

In this model there is a single club run by a single MC that admits and removes members, organises the sporting activity and manages the property and financial affairs of the club. There is one bank account and one set of accounts. Each individual wishing to join becomes a member and pays a subscription to the club. This type of club can be accepted by HMRC as a CASC, provided that it meets the statutory criteria, including having an appropriate constitution.

2.2 Single entity with integrated sub-sections

Here the club has a single MC that is responsible for running the club. The MC delegates' responsibility to different sub-committees to organise the various different sports and may also choose to delegate responsibility for admitting members to their sections (for example the football committee admits members who wish to play football). The MC may set guidelines for subscriptions but the exact level may be left for individual sub-committees. Members wishing to play different sports may need to apply to the appropriate sub-committee and pay the appropriate subscription or the MC may deal with subscriptions. Each section may have regulations or byelaws setting out their delegated responsibilities.

2.2.1 In some cases these sub-committees may operate separate bank accounts (which are all club bank accounts). Indeed, separate sections may be required by governing bodies or grant makers to compile separate accounts. However, the club must consolidate these into one set of club accounts, which will incorporate the income and expenditure of all the integrated sub-sections.

2.2.2 Final responsibility for the whole club rests with the central MC who can, for example, limit the amount of expenditure and debt each sub-committee can incur. In addition, on winding up, the assets from one section of the club are available to cover debts in other sections. This type of club can be accepted by HMRC as a CASC, provided that it meets the statutory criteria.

2.3 Lead or 'mother' club with independent affiliated clubs

Here one club (for example a rugby club) may own and manage the facilities, but allow affiliated clubs to use its facilities.

2.3.1 In such circumstances we would look at each club separately. Each individual club would need to decide whether to register as CASCs in its own right. The lead club would benefit from mandatory non-domestic rates relief if registered.

2.4 Each affiliated member club can each be accepted by HMRC as a CASC, provided that it meets the statutory criteria. On the same basis, the 'mother' club can also be accepted as a CASC, although such clubs may find they do not meet the criteria.

2.4.1 Often each individual member of an affiliated club is required to become a member of the mother club. They may for example be automatically given membership of the mother club when admitted as a member of an affiliated club. Or the mother club may admit them as members and then they apply or are allocated to the different affiliated clubs, depending on what sport they wish to play. There may be a subscription to join the mother club or this may be free with subscriptions paid to the affiliated clubs for membership of these.

2.4.2 The members of the mother club appoint the MC of the mother club (which may specify that each affiliated club must be represented etc).

2.4.3 Each club within this structure will have to decide whether it wishes to apply for CASC status. Applications will be judged independently upon the criteria of the CASC scheme.

2.4.4 It is not essential for all (or indeed any) affiliated club to apply or qualify as a CASC for the mother club to apply in its own right for CASC status. Regardless of the activities of any affiliated clubs, to be accepted as a CASC, the mother club must itself meet the statutory criteria. Crucially this means that the 'mother' club must itself actively promote participation in eligible sports and cannot merely be a passive provider of facilities. (See paragraph 4)

3. Multi-sports clubs that cannot qualify as CASCs

3.1 'Mother' club with affiliated member clubs

Where the mother club has no individual membership, but has as its members the affiliated clubs (that is it is a club of clubs), then we will not accept that the 'mother' club can register as a CASC, though the affiliated clubs will be able to apply for CASC status.

3.1.1 This structure does not comply with the CASC requirements as membership is only open to organisations (the affiliated clubs) and not to individuals. It is therefore not open to the whole community.

4. Promoting participation within a mother club/affiliate structure

4.1. The CASC legislation clearly states that a club must provide facilities and promote participation. Providing facilities does not of itself meet the requirements to promote participation. The club must actively promote participation. The CASC scheme is not appropriate for organisations that operate solely as facility providers.

4.2 Activities that a 'mother' club might engage in to promote participation in sports might include:

  • actively engaging with the local community and the sports governing bodies to widen participation
  • publicising its facilities and the sports that it caters for and taking positive action to attract new participants to the club
  • organising festivals, tournaments and coaching courses

It will be a question of fact to be decided in individual cases whether a club's activities are sufficient to amount to promoting participation.

4.3 In the mother club/affiliate club model the mother club and each of the affiliate clubs choosing to apply for CASC status must individually meet the criteria of the CASC scheme. The mother club cannot itself claim to have fulfilled certain criteria such as promoting participation in an eligible sport merely because of the actions of an affiliate club. Neither can the affiliate club claim to have met certain criteria based upon the actions of the mother club.

5. Affiliated clubs

5.1 Where a club has affiliated clubs (examples 2.3 and 2.4) it is not necessary for all those affiliated clubs to register as CASCs. This is a decision for the clubs.

5.1.1 However, where members of the affiliate club are automatically entitled to membership of the mother club (example 2.4) the mother club will need to be certain that it can prove that its own main purpose is providing facilities for and promoting participation in eligible sports and that its own membership is open to the whole community. This will be easier to demonstrate where the affiliate clubs are CASCs - but it is not a prerequisite that the affiliate clubs qualify as CASCs.

5.1.2 Affiliate clubs that are not registered as CASCs, for example because they engage in activities that are not eligible may affect the ability of the mother club to claim CASC status as their members could be treated as being non-participating members in the mother club. Broadly at least 50 per cent of members must be participating in eligible sports for the club to retain its CASC status. This will be determined on the facts of each case.

5.1.3 Affiliated clubs need not be tied to the mother club and may break the relationship with the mother club. However, this may in certain circumstances affect the status of the mother club as a CASC, for example if the majority of the remaining members of the mother club are non-participating.