Many sports clubs in the UK struggle with cash flow, which often leads them to look at becoming a Community Amateur Sports Club (CASC). There are some very generous benefits of becoming a CASC, but it doesn’t suit every club.
Possibly the most beneficial allowance that CASCs are given is the Corporate Tax reliefs. CASCs are able to qualify for Corporate Tax Reliefs on the following:
- UK trading profits if the turnover from that trade is less than £50,000 a year
- UK property income if the total income from property is less than £30,000 a year
- interest received
- chargeable gains
In addition to this CASCs are given 80% relief on business rates with an additional 20% given at the discretion of their Local Authority. However, it is quite rare that Local Authorities do give CASCs full rate relief, nevertheless it is a massive help to the 6,824 registered clubs. In fact, in the period to 31st July 2015 registered CASCs took advantage of £194.9 million worth of cash benefit and 91% of this was made up of mandatory tax relief.
The other 9% was made up of Gift Aid, as Community Amateur Sports Clubs can claim Gift Aid on qualifying donations from individuals and businesses. They can also claim gift aid on small donations through the Gift Aid Small Donation Scheme (GASDS) although they cannot claim Gift Aid on member subscriptions or payments of other goods. Due to their status, individuals will also pay no tax on donations to the club.
It must be noted that CASCs cannot be deregistered and any applications cannot be withdrawn once it has been sent to HMRC, unless it has been sent in for clearance under the incorporation process. The HMRC can also refuse to register a club. Therefore, you really need to consider whether becoming a CASC is the right thing to do.
There are many other terms that needs to be considered before becoming a CASC.
First of all, you must provide and promote facilities for an eligible sport. With regards to paying players, the total amount paid to all players in a 12-month accounting period cannot exceed £10,000, which includes non-cash benefits. This figure is dependant on the length of your accounting period, so if your accounting period was for example 10 months then you can pay your players up to £8,333 a year. Any travel and subsistence expenses must also be reasonable and must only be reimbursed for journeys longer than a reasonable daily journey.
For this reason, any clubs that are dependent on attracting the top talent by incentivising their players with a decent wage and full expenses would be restricted as a CASC. The CASC status also wouldn’t really suit any clubs that are pushing to play professional sport in the future, as it is aimed at those organised on an amateur basis.
Moreover, any club with professional aspirations also must bear in mind that they have to be open to the whole community without discrimination. Since April 2015, 50% of CASC member’s must be participating in the sport and the manager must meet the ‘fit and proper person’ requirements. Again demonstrating that the club should be ran at an amateur level.
CASCs should be non-profit making and their gross taxable trading income (generally non-member) and income from property combined must be lower than £100,000 PA. Membership fees cannot exceed £1,612 per year on a pro-rata basis and associated membership costs should be no more than £520 per year for all members. This might restrict some golf clubs and any other costly sports clubs from becoming a CASC.
However, with the money generated through tax reliefs and Gift Aid donations the benefits might outweigh any past financial complications. When it comes to deciding whether or not you should become a CASC, you should align the legal structure with the club’s aspirations. If the club needs the financial support as it is sports club is at the centre of the community, then it is worth considering changing to CASC status. If the club is struggling financially, but they are selective with players as their aspirations are to be recognised as a professional club, then maybe becoming a CASC isn’t for them.
Whatever route you take make sure that you consider it very carefully as it is an irreversible decision.
