By Thea Longley and Richard Baldwin
This year marks the 20th anniversary of the introduction of the CASC scheme, which provides a number of tax benefits to amateur sports clubs. Clubs registered with HM Revenue & Customs as CASCs have received an estimated £350 million in cash benefits since 1st April 2002. The scheme’s annual value is estimated at over £40 million and average annual cash benefits per club are around £5,500. The scheme is a light touch for the 7,366 CASCs shown currently on HMRC’s published list.
Lobbying for CASCs
CASCs introduction was a team effort after extensive lobbying of Gordon Brown, Chancellor of the Exchequer, and HM Treasury Ministers prior to 2002. Andrew Phillips, Bates Wells founding partner, ably supported by Richard Baldwin, Deloitte lead sports tax partner, was instrumental in devising and proposing the CASC scheme. They combined with Sport England and the Sport and Recreation Alliance in their approaches to HM Government officials.
The cash benefits
CASCs enjoy 80% mandatory business rates relief, corporation tax exemptions and can benefit from tax reliefs for individual giving. In 2022/23 local sports clubs enjoy a 50% reduction in their business rates and CASCs a further 80% reduction. CASCs will therefore at most only pay 10% of their normal rates bills this year. Thereafter they will only be liable for 20% which the Local Authority may reduce further at their discretion.
Corporation tax exemptions can also be valuable. Specific legislation was introduced in 2020 to tax Coronavirus business support grants even though many clubs do not carry on taxable activities. CASCs can usually avoid corporation tax on these but other non-registered clubs can’t.
Finally there are reliefs for gifts from individual taxpayers to a CASC. Gift aid and grants under the Gift Aid Small Donations Scheme (GASDS) on gifts of income are available. Individual qualifying donations to a CASC under gift aid provide 25% cash rebates from HMRC. Tax refunds can also be claimed by individual donors if they are higher or additional rate taxpayers. Inheritance tax exemption is available for lifetime gifts of capital and legacies to CASCs.
How do clubs qualify?
There are qualifying conditions which need to be considered carefully but amateur not-for-profit clubs providing sport in the community should usually have no difficulty in registering. The club must be open to the local community and be regarded as amateur with affordable subscriptions and fees. It cannot pay its surpluses to members or pay members significant amounts for participating in sport (they can be paid for coaching and other services). The club’s Constitution or Articles of Association must meet the CASC rules and be approved by HMRC.
The straightforward HMRC application process requires the completion of a form and submission of documents including the latest club Annual Accounts and Constitution/Articles. Only HMRC can de-register the club if it subsequently fails to qualify. Members should bear this in mind before deciding to register since they are unable to share in the club’s assets if things change. Once registered, contact from HMRC is usually minimal limited to an occasional request to file corporation tax returns and gift aid/GASDS claims for repayments.
HMRC has always supported CASCs and has been keen to promote their use of gift aid. In March 2020 HMRC issued a Press Release to coincide with Sport Relief. Salisbury Rugby Club, a CASC, provided a testimonial which HMRC used stating that “Gift aid contributed almost £25,000 [towards new changing rooms]: we couldn’t have been successful without it”.
The way forward
The authors have been advising CASCs since the earliest days working together on many community clubs and assisting National Governing Bodies of Sport in establishing club guidance and helplines.
There are an estimated 150,000 community sports clubs nationally with an estimated 40,000 owning or leasing property. CASC status is potentially valuable to the latter because of business rates relief, providing considerable scope for more clubs to register. In the current difficult financial environment many are considering incorporation to protect Management Committees and members; at the very least those clubs should consider CASC as part of that process.
Richard Baldwin has specialised in the taxation of sport for over 40 years. He retired in 2005 as a tax partner in Deloitte’s London office leading its sports tax practice. Since then, he has spent most of his time advising clubs on tax particularly CASC and charity status. In 2013, Richard was awarded the MBE for his services to sport. He is retained tax adviser on community sport to a number of leading National Governing Bodies of Sport.