Reminder for Community Amateur Sports Clubs (‘CASCs’) to check they remain eligible for the scheme
We have been made aware that HMRC are in the process of writing to Community Amateur Sports Clubs as part of their ‘one too many’ campaign to ensure that registered CASCs still meet the eligibility criteria for the scheme.
Katherine Robinson provides a glimpse of the CASC rules below and the importance of considering a club’s tax position.
What is a CASC and what are the tax benefits of being a CASC?
CASCs are small local amateur sports clubs that have been registered as such with HMRC.
The scheme was introduced in April 2002 to allow clubs registered with the scheme to benefit from:
- A range of tax exemptions;
- Being able to reclaim gift aid on certain donations from HMRC; and
- A reduction in business rates (usually 80%).
However, under the scheme, CASCs are required to regularly check that they continue to meet the conditions of the scheme, which are as follows:
- be open to the whole community;
- be organised on an amateur basis;
- have as its main purpose the provision of facilities for, and the promotion of participation in, one or more eligible sports, and at least 50% of the members are participating members;
- will not earn in excess of £100,000 a year from non-member trading or property income;
- meet the management condition – (i.e. the club’s management must be ‘fit and proper’); and
- must be based in the UK and provide sports facilities in the UK.
If a registered CASC breaches one of the above conditions and refuses to take steps to meet all of the above conditions, then the CASC will lose their tax status, resulting in a loss of tax benefits. They may also face a tax charge on deregistration based on the value of the club’s assets at the time of deregistration.
Thinking of becoming a CASC? Is CASC status right for your organisation?
While some clubs generally operate for the benefit of their members, their activities do not always constitute commercial trading activities, and would be considered non taxable. However, a club would be required to pay tax on any commercial trading profits, rental profits and investment income.
Registered CASCs benefit from the exemptions available on trading income and property income, which are currently £50,000 and £30,000 respectively, as well as exemptions for investment income and gift aid income. If trading income or rental income breach the thresholds, the full amount will be taxable.
A club can, however, register to become recognised as a charity for tax purposes and are afforded more generous corporation tax exemptions, as well as being able to reclaim gift aid on certain donations and benefit from a reduction in business rates. Depending on the size of the organisation, registering as a charity for tax purposes may be more beneficial for some sports clubs, but professional advice should be sought to help your club weigh up the options.
Unfortunately, a CASC cannot become a charity for tax purposes, not without restructuring which can be expensive. That is why it is important to consider your club’s tax position before committing to becoming either a registered CASC or charity.
If you would like more information on CASCs and whether your club would benefit from registering as a CASC or charity for tax purposes, our not-for-profit tax experts will be able to assist you further.
