Taxation advice in respect of Charities /Community Amateur Sports Clubs
A number of governing bodies and clubs have in-house charities, in order to fund community sport as well as numerous other good causes. In recent years, the complexity of establishing a charitable structure has increased, in no small part due to the tax anti-avoidance legislation introduced during 2006. Following discussions with the major National Governing Bodies of sport around the concerns associated with the new anti-avoidance legislation, Deloitte produced a response to Government’s consultation document on the legislation in October 2008. A response is expected in early 2009.
It is often assumed that the direct tax implications of establishing a charitable entity are straightforward. Following the introduction of the anti-avoidance legislation, this is certainly not the case.
Indirect taxes can be a significant cost to charitable entities. Furthermore, in-house charities can have an impact on the VAT recovery of a sports NGB itself. The VAT implications of a sports body establishing a charitable entity need to be carefully considered prior to commencing such a project.
The Community Amateur Sports Club (CASC) scheme was unveiled by Government in April 2002. Deloitte played a big part in helping to establish the scheme and continue to be supporters of the scheme, assisting clubs with ad hoc queries and contributing to the dedicated CASC website www.cascinfo.co.uk. The scheme enables all CASC registered sports clubs to obtain a number of tax incentives:
- 80% mandatory business rate relief. Local authorities can offer up to 100% relief to clubs at their discretion
- the ability to raise funds from individuals under Gift Aid. A registered CASC can reclaim up to £28 in tax for every £100 donated, though at the moment this does not apply to all types of donations.
- CASCs are exempt from Corporation Tax on profits derived from trading activities if their trading income is under £30,000 pa.
- profits derived from property income are also exempt for CASCs if gross property income is under £20,000 pa, of particular relevance following the abolition of the nil rate band.
- CASCs whose income does not exceed these thresholds will no longer be required to complete an annual Corporation Tax return.
During October 2008, the 5,000th CASC registered with HMRC, which is a significant milestone and at that date total savings over the life of the scheme were estimated at £50m. However, Deloitte estimate there are around 150,000 sports clubs in the UK, of which around 40,000 are both eligible to register and own their own premises. If every eligible club registered, the total annual savings in business rate relief alone could be as much as £100m per annum.
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