Community Amateur Sports Clubs (CASCs)

Questions and answers

Does 'open to all' mean clubs can never refuse membership?

Clubs can refuse membership, where they have good reason to believe that the applicant would be a disruptive influence or prejudice the good conduct of the club. But there must be no discrimination in such a decision.

Can a club pay players?

If you have members who play, but are also paid in some other capacity, perhaps as a groundsman or a bar steward, then that is fine. Also some clubs, particularly some cricket clubs, might have a club professional. That is acceptable as long as the person is actually also performing some other role, such as coaching other members of the club or promoting the sport in schools or the wider community. What is not acceptable is to pay members simply to play. The scheme is about supporting clubs which provide facilities for, and encourage, sport in their communities, not clubs which are simply looking for success in competition.

Can a club carry on social activities?

Yes, but we would expect most of its efforts to be directed at what the legislation requires to be its main purpose, providing facilities for, and promoting participation in, an eligible sport. We would expect the majority of club members to be involved in sport in some capacity. The scheme has no problem with a club that provides facilities, such as a bar or even facilities for a non-eligible sport like darts, provided this is ancillary to its main purpose. What the scheme is not there to support is a pub with a football pitch outside.

Can the club claim Gift Aid on subscriptions?

No, the legislation categorically states that membership fees cannot be treated as gifts, and therefore cannot come within Gift Aid.

What if the club made membership free and asked members for donations? Could that come within Gift Aid?

Clubs are, of course, free to set membership fees at whatever levels they like. We would look closely at any club that suddenly went from charging, say, £100 a year to free membership but coupled with a request for a donation. The acid test would be whether anyone could come along and join the club and have access to all the facilities for nothing. If the club were prepared to take that risk, so be it. But, in practice, we believe that most clubs would want to ensure that the membership fees at least covered their running costs.

Charities like National Trust Gift Aid their membership. Why can’t we?

CASC membership fees are specifically excluded from Gift Aid by the CASC legislation.

As CASCs cannot distribute profits to members they will not be mutual clubs. Does this mean that clubs will have to pay tax?

No, not necessarily. Ordinarily the club will not be trading with its members with a view to any profit so it will not pay any tax on this income. It will, however, be liable to tax on any income from non-members, such as use of the bar or hiring of facilities, although clubs will benefit from the de minimis corporation tax exemption thresholds, of £30,000 on trading income and £20,000 on rental income.

What is trading turnover?

Trade involves the sale of goods or services for profit. Trading turnover is the gross receipts received by a CASC from trading activities before the deduction of trading expenses.

If our trading income exceeds the corporation tax exemption threshold, do we only pay tax on the excess?

No. The whole of the trading income would then be taxable. But that is not the same as paying tax on that amount. The club would need to establish how much was profit, after deducting its expenses in earning that income. The resulting profit would be liable to tax.

If our gross rental income exceeds the corporation tax exemption threshold, do we only pay tax on the excess?

No, the whole of the rental income would then be taxable. But that is not the same as paying tax on that amount. The club would need to establish how much was profit, after deducting its expenses in earning that income. The resulting profit would be liable to tax.

Does this mean that the club no longer pays any tax?

No, the club might still have taxable income, perhaps if there were substantial use of the bar by non-members or if the club was spending money other than in pursuit of its main purposes. And, of course, the club is still responsible for the any employee's tax, such as:

• Deduction of PAYE and NICs on employees wages
• Reporting of any benefits received by staff.
• Reporting details of reimbursed expenses (unless dispensation granted by HMRC)

Can a club de-register?

There is no provision in the legislation for a club to de-register. Once a CASC, always a CASC. Before applying to be a CASC, members really need to be agreed that what they really want is to maintain the club for the continuing use of the community. If members have one eye on selling off the ground for building a supermarket and sharing the profits, then CASC status is not for them. If a CASC ceases to operate, its assets would have to be passed on in accordance with the legislation to another CASC, the governing body of an eligible sport or a charity.

What if a CASC breaks the rules?

It would depend on what the transgression was. We would normally expect to give the CASC the chance to rectify the position, provided that was possible. But, if the matter were more serious, such as distribution of assets to members, we would de-register the club with effect from a suitable date which would mean that the club ceased to enjoy the CASC tax exemptions from that date. That could, for example, lead to a substantial capital gains charge on assets taken out of the CASC.

What will HMRC require for club accounts?

We will impose no special requirements. We would expect a CASC's members to want the accounts to be kept and audited in a way commensurate with the size of the club's income.

The legislation withdraws exemptions from CASC if they spend income or gains on non-qualifying purposes. What about money invested or expenditure on a Christmas/end of season party for the juniors?

The holding of surplus funds in commercial deposits or investments would not be regarded as non-qualifying expenditure so long as the investments were readily realisable and produced income that was applied to qualifying purposes. If funds were tied up in dubious investments that did not protect their value or produce income then we might question them. There is no problem with funding an event for all club members so long as it is related to club activities such as the juniors' party, supper at the AGM, or disco & buffet at awards evening. We would question anything that looked like a jolly for selected groups, e.g. bowls club fact-finding trip to Marbella.

The requirement that, in the event of dissolution, the net assets of the club must be applied for approved sporting or charitable purposes conflicts with the requirements of certain grant-makers to return any unused grants to them.

There would be no problem with unspent grants being returned to the grant-making body where this was a condition of the grant, provided that this claw-back related solely to any unspent grant. The contractual obligation to repay constitutes a liability that would need to be repaid before it could be established that there was any residual surplus which the CASC legislation would require the club to pass on to another CASC, charity, or sports governing body. CCPR agree with that interpretation of the legislation and are not aware that grant-makers have any particular problem with the legislation.

How do we obtain mandatory rates relief ?

Clubs must apply for CASC status and then take a letter of confirmation from this office with the CASC reference number to their council. Relief will not be granted retrospectively. However, we do backdate registration to the start of the accounting period in which the club applies for registration provided that its constitution meets the requirements of the CASC scheme from that date.

Are all CASCs eligible for mandatory rates relief?

Yes.

Does the mandatory rate relief mean that clubs must register as CASCs to gain relief?

Only clubs registered as CASCs will receive mandatory rates relief. Clubs that are not registered as CASCs may continue to benefit from discretionary relief, but this is a decision for their local authority and not HMRC.

My club previously received 100% discretionary rates relief. Will mandatory rates relief affect this?

Local authorities that have previously given discretionary rates relief above 80% can top up the discretionary rates relief, so that 100% relief may still be available. This is a decision for individual local authorities.

We are a new club and have only been running for three months and do not have accounts. Can we apply?

As soon as a club can show that it is established, has members and is operating as a club we will consider its application. We usually ask for accounts as a way of substantiating that the club is actually up and running and for evidence of how it operates. We are, however, prepared to accept other evidence of this if accounts are not available. This could include bank statements, membership documentation, rule books etc, press reports of their activities and any published adverts for the club or evidence of affiliation with a governing body.

Once registered what involvement will HMRC have in the day to day running of the club?

HMRC will not involve itself in the day to day running of the club. The club will be required to submit Corporation Tax returns on an annual or periodic basis and may be subject to an audit of any repayment claims submitted.