Amateur Sports Clubs - Charity or CASC?

Amateur sports clubs can potentially be registered charities or CASCs – a Community Amateur Sports Club. Which registration is right for your organisation will depend upon a number of factors, including whether you fit the particular definition, and the needs of the club itself. This note sets out the requirements for both, and compares the available reliefs for both types of registration.

What is the difference between a casc and a sports charity?

Essentially, the difference between a CASC and a charity, is that a charity has charitable status and registers with the Charity Commission and HMRC, but a CASC is only registered with HMRC. Charitable status brings with it a number of tax reliefs and reputational benefits, but also greater regulatory control and more stringent limits on trading. Whilst a CASC will benefit from less regulatory control and less stringent limits on trading, there are fewer tax reliefs available, and only a defined list of sports are eligible.

Charitable sports clubs

At present, the guidance for sports clubs wishing to register as a charity is found in Charity Commission document RR11. Sports clubs need to show that they: Advance amateur sport (s.3(1)(g) Charities Act 2011) or promote community participation in healthy recreation by providing facilities for playing particular sports (s.3(1)(m)); have open membership; are amateur; and are for the public benefit.

  • “amateur”: The word ‘amateur’ is not defined in the Charities Act 2011, but it has been suggested that the definition in the Corporation Tax Act 2010 should apply in the same way as it does to CASCs. That definition appears below.
  • “sport”: This includes sports or games which promote health by involving physical or mental skill or exertion (s.3 (2) (d)).
  • “community participation” and “healthy recreation”: To show community participation, membership must be affordable for the majority of the community; and there must be no test of skill for admission into the club. Linked to this is the need for an “open membership”, which means that there are facilities for all who wish to play, encouraging community participation. The Commission do accept that there are certain circumstances where membership may be legitimately restricted, but all members must be playing members or non-playing volunteers or helpers, and the provision of facilities for exclusively ‘social’ members is not charitable. Having said that, charitable sports clubs can operate social elements through a trading subsidiary.& Competition and team structures and coaching are all legitimate activities, so long as where facilities are allocated to higher performing members, the club can demonstrate equal treatment of less skilled and less competitive members. The same is true of coaching – it can be provided, but must be available for all members, whatever their skill level. Healthy recreation includes physical exercise that has a direct correlation with physical health e.g. being fitter will reduce ones chances of heart disease. The Charity Commission have suggested the following are excluded from this definition: Angling; Ballooning; Billiards, pool, snooker etc.
  • “public benefit”: As with all charities, the club must exist for the benefit of the public rather than just its members (even if it has a membership structure); and those in poverty must not be excluded from membership of the club and the club may have to adapt its fees to comply. Once registered as a charity, to obtain the relevant tax reliefs the charity also has to register with HMRC, and this involves meeting the “fit and proper persons” test, as set out below.
Community amateur sports clubs

To be registered as a CASC with HMRC, a sports club needs to have a formal written constitution, and meet certain conditions, the detail of which we have set out separately. In summary: Membership and facilities are open to the whole community; The main purpose of the Club is the provision of facilities for, and the promotion of participation in, one or more eligible sports, and to encourage people to take part in them; The club must be organised on an amateur basis; The facilities are provided in an eligible area; and The club is managed by fit and proper persons.

  • “open to the whole community” Membership and facilities must be open to all without discrimination. Fees, if charged, must not represent a significant obstacle to membership or use of the club’s facilities.
  • “eligible sport” This is defined by reference to the Sports Council’s list of recognised activities, and a list is provided on the HMRC website.
  • “organised on an amateur basis” HMRC will accept this is the case if you can show that: The club is non-profit making, in the sense that all profits are reinvested in the club; Only ordinary benefits are provided to the club members and guests e.g. provision of equipment, sport facilities, suitably qualified coaches and coaching remuneration. Payments to players may be acceptable if paid to a minority – aiming to support wider participation in the club; and The club’s constitution states that on dissolution any net assets are to be applied to approved sporting and charitable purposes.
  • “eligible area” The sports club must be established within the EU or relevant territory, and provide facilities in a single EU Member State or relevant territory.
  • “fit and proper persons” Those involved in the day to day running of the club must be “fit and proper persons”. Individuals convicted of tax fraud or disqualified from acting as a charity trustee are not considered “fit and proper”, but a full explanation of this test can be found on the HMRC website. HMRC has published details of the new rules that the government proposes to introduce as a result of its consultation on the conditions that a club must meet in order to qualify as a CASC. These rules will be set out in regulations to be published in draft for a short consultation in early 2014 before being put before Parliament. HMRC will publish guidance on the new rules and existing CASCs will have 12 months from the date the regulations come in to force to make any necessary changes.
Tax and other available reliefs

The table below sets out the potential reliefs available to both charitable sports clubs, and CASCs.

Reliefs Available

Charity

CASC

Corporation Tax on interest

Exempt

Exempt

Corporation Tax on trading income

All primary purpose income exempt and up to £50,000 of turnover on trading outside the charitable purposes

Exempt if turnover is no more than £50,000 per year

Corporation Tax on income from property

Exempt

Exempt if rent is no more than £30,000

Capital Gains and Corporation Tax on disposal of assets

Exempt

Exempt

Gift Aid

Gift aid on donations made by individuals and companies.

Gift aid on donations made by individuals and not on subscriptions and companies.

Inheritance Tax

Inheritance Tax reliefs

Inheritance Tax reliefs

Gifts of assets

Gifts of assets on a no-gain, no-loss basis for capital gains

Gifts of assets on a no-gain, no-loss basis for capital gains

Gifts of trading stock

Relief on gifts of trading stock

Relief on gifts of trading stock

Gifts of shares

Income Tax relief on gifts of shares

No Income Tax relief on gifts of shares

Rates Relief

80% mandatory relief if property used wholly or mainly for purposes of the charity + 20% relief at the discretion of the local authority

80% mandatory relief if property used wholly or mainly for purposes of a registered CASC + 20% relief at the discretion of the local authority

Payroll Giving

Payroll giving possible

No payroll giving

VAT relief

Specific reliefs available (see HMRC website for more details)

No specific relief

Stamp Duty Land Tax

Exemptions on rents paid and purchases

No exemption

The law and practice referred to in this article or webinar has been paraphrased or summarised. It might not be up-to-date with changes in the law and we do not guarantee the accuracy of any information provided at the time of reading. It should not be construed or relied upon as legal advice in relation to a specific set of circumstances.

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