The CASC scheme was introduced to provide financial support, through tax reliefs, to amateur clubs which encourage participation in sport and which would otherwise struggle to survive. This article sets out the main rules for CASCs and more detail can be found in the HMRC guidance.
- 1. Open to the whole community
A CASC must ensure that it does not charge any person more than £1,612 a year for membership of the CASC. If the cost of any membership exceeds this amount, then the club will not be considered as being open to the whole community and cannot be a CASC. In calculating the membership cost, a club should include joining fees and any compulsory subscriptions that members are required to pay in order to join. A CASC must also then ensure that the costs “associated with membership” are no more than £520 a year. To calculate the costs associated with membership, a CASC must add the cost of the most expensive membership to the costs of the sporting activity. The costs of the sporting activity are those costs incurred in addition to the membership fee, and include hiring charges, match fees, cost of purchasing specialist equipment, cost of hiring required clothing and any insurance cost. A CASC need only include the minimum cost of purchasing or hiring equipment. This could, for example, be the cost of purchasing second-hand equipment online. If the CASC provides equipment free of charge then no additional cost will be necessary. These costs are to be calculated on the basis that a member participates 52 times a year. If the costs associated with membership do exceed £520 a year, then the CASC will have to ensure it has satisfactory provision in place to ensure full participation for those who cannot afford to pay more than £520. HMRC must be satisfied that these arrangements are sufficient and the guidance includes examples of arrangements that would be considered acceptable. CASCs can also seek specific confirmation from HMRC if they are unsure about whether their arrangements are sufficient.
- 2. Organised on an amateur basis
The rules allow payments to one or more players to play for the club, up to a combined total of £10,000 a year. It should be noted that: the value of any non-monetary benefits provided to a player will count towards this limit; the payment must be negotiated on an arm’s length basis; the payment cannot be paid to an officer of the club or anyone connected with an official or manager of the club; and the payment cannot be made by one club in order for the individual to play for another. The rules also allow a club to make reasonable and necessary subsistence and travel expenses payments. CASCs should note that: expenses are only considered reasonable if the purpose of the event is to promote and participate in the sport; subsistence payments will only be necessary where the fixture involves a round trip of at least 4 hours from the club’s premises; and only standard class public transport will be considered necessary and reasonable. More detail is included in the guidance, including in relation to club tours, that CASCs should familiarise themselves with.
- 3. Purpose of the club
The rules state that a CASC must ensure that at least 50% of its members are ‘participating members’ and not social members. If a CASC exceeds this threshold then it will be considered a social club rather than an amateur sports club. For a member to be considered as participating in the sport, they must take part in the activities on at least 12 separate days in a year. This can include playing, volunteer coaching, officiating at games, acting as a grounds man or transporting teams to matches in a club minibus. However, transporting children in a personal vehicle is not considered as participation in the sport. CASCs will therefore now need to keep a record of the number of social members, and the amount of their ‘participation’, to ensure that the 50% limit is not breached.
- 4. Income of a club
There is now no limit to the amount of income which a CASC may generate from transactions with its members. There is however a turnover limit of £100,000 which applies to transactions with non-members, property income and other trading income. There are though some important points to note for this rule: “member”, in this context, means a full voting member who exercises some control over the running of the club and who participates in club activities. Junior members are considered “members” but associate or social members may not necessarily be included. Trading income received from any non-voting members will therefore count towards the £100,000 limit; any income derived from property (whether that is received from members or non-members) will also count towards the limit; and the £100,000 limit relates to turnover rather than profit and clubs will not therefore be able to deduct costs when calculating whether the limit has been reached. CASCs will therefore need to implement a system to monitor the income received from members and non-members and particularly whether the £100,000 limit will be reached. This will be particularly relevant for clubs with bars and those with categories of associate or social members who do not have full voting rights and do not participate in the club’s activities.
- 5. Corporation Tax exemptions and Gift Aid
Any income received from trading with members (defined as full voting members, as for income above) is exempt from corporation tax. Income received from trading with non-members will be exempt from corporation tax provided it does not exceed £50,000. Property income is exempt from corporation tax provided it does not exceed £30,000. It should be noted that: again, the limits relate to turnover rather than profit and clubs will not therefore be able to deduct costs when assessing the income against the thresholds; property income again includes income from both members and non-members; if the relevant thresholds are exceeded, then corporation tax will become payable on all the trading receipts and not just those above the threshold; and to claim the exemption, all the income must be applied for qualifying (sporting) purposes. CASCs will therefore need to ensure that they have a robust accounting system in place to monitor the income being derived from non-member and property trading. Where a CASC’s income is approaching these thresholds, then it may consider establishing a trading subsidiary to operate certain activities. Company donations to CASCs are treated as qualifying charitable donations and are deductible from a company’s taxable profits. Therefore, enterprising CASCs can use a trading subsidiary to operate commercial activities to raise funds for the CASC in a tax efficient way.