News – Autumn 2019
CASCs should check compliance
The CASC qualifying conditions changed significantly from April 2015 including, for example, the addition of a trading and property income test of £100,000 or less per annum and a cost associated with membership test of £520 or less per annum. Inflation has eroded the value of these limits over the last 4 and a half years since the 2015 changes. With stretched finances CASCs may have increased member charges and other income to balance the books so they should check they still comply with the conditions of registration. If not, CASCs should take action to ensure they do.
Corporate Criminal Offence
Failure to prevent the criminal facilitation of tax evasion is a serious criminal offence. HMRC highlight that companies can be criminally liable if they fail to prevent their staff or those that represent them from facilitating illegal tax evasion. Incorporated sports clubs including CASCs may be at risk. An example of this may possibly be if the club pay bills from service providers in cash to avoid paying VAT. Incorporated CASCs need to put in place procedures to prevent them being guilty of a Corporate Criminal Offence and this should be done now.
Corporation Tax on Capital Gains
Sports clubs not registered as CASCs may face a potential corporation tax bill on gains from the sale of all or part of club property e.g. their land and sports facilities. This may be the case even though the proceeds may be re-invested in facility improvement. Some unregistered sports clubs are not aware of this. Clubs which have registered as CASCs pay no corporation tax on their capital gains as exemption from this is one of the benefits of CASC registration.
CASCs are able to provide limited benefits to an individual donor as a consequence of a donation and still claim gift aid on that donation. From April 2019 the benefit thresholds have changed slightly which may assist in attracting larger donations.
VAT Zero Rating
VAT zero-rating of new sports buildings is available to charitable sports clubs provided they satisfy certain conditions. A community sports club has recently failed in its argument with HMRC that a CASC should also be entitled to zero-rating relief. HMRC say that CASCs are not entitled to VAT zero rating on the construction of new sports buildings. However there are a number of other valuable tax benefits available to sports clubs registered as CASCs.