Club Matters: Club Structures

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1 Understanding the options for Club Structures Welcome and introductions What we ll cover By the end of this workshop you will Be clear about the importance of club structures Have an overview of the different types of structures and statuses available for clubs and understand the pros and cons of each Have clear action points for you to take away and work through with your club Understand more about the Club Matters programme, how we help clubs and how we can support you 3 1

2 Why organisation structures matter to sports clubs What is it and why does it matter? Organisation structure = how a club is viewed in the eyes of the law Why is it important to have the right structure? Protection for those involved in running clubs Save money - tax benefits Promotes good governance Important to people outside of the club 5 6 2

3 Your current structure How is your club currently structured? Why is it structured that way? Is this the best way for your club now and in the future? 7 Types of Legal Structures versus incorporated Incorporate Separate legal entity No Yes Contracts In name of member In name of club Limited liability No Yes Admin requirements None specifically required Yes e.g. Companies House/FCA/Charity Commission Governance requirements No legal requirements Legal requirements Statutory requirements Operate within them Operate within them and any additional legal requirements 9 3

4 Benefits and drawbacks No formal legal requirements No extra admin More formal structure Promotes good governance Limited personal liability Viewed well by external parties x x Not a legal entity Unlimited liability Increased personal risk Formal legal requirements Admin (e.g. annual return / annual accounts) Responsibilities of Directors 10 Type of Organisational Structure association Company limited Company limited by guarantee by shares Community Benefit Society Charitable Organisation 11 Knowledge quiz Match the statements to the different types of structure. Insert the number in the relevant box. association Company limited by guarantee Company limited by shares Community Benefit Society Charitable Organisation 1. Owned by the members 6. No formal legal requirements 2. Must be for the benefit of the community 7. Operate on 1 member 1 vote system 3. No separate legal entity 9. Liability limited, often to 1 4. Combines charitable status and an incorporated entity in one structure 10. Individual has unlimited liability 8. Owned by shareholders 5. Can be public or private 12 4

5 association Company limited by guarantee Company limited by shares 3. No separate legal entity 1. Owned by the members 5. Can be public or private 6. No formal legal requirements 9. Liability limited, often to 1 8. Owned by shareholders 10. Individual has unlimited liability Community Benefit Society 2. Must be for the benefit of the community 7. Operate on 1 member 1 vote system Charitable Organisation 4. Combines charitable status and an incorporated entity in one structure 13 Community Interest Companies Company limited by guarantee Company limited by shares Community Benefit Society Charitable Organisation Community Interest Company Benefit the community assets tied in Can be profit making Submit a Community Interest Statement No tax benefits 14 When it is suitable Generally suitable if: Generally suitable if: Small local club Employ staff Don t own assets (property etc.) Don t take on any contracts Apply for finance (loans or grants) Not involved in high risk sport Own assets Protected fully through 3 rd party insurance Taking on a lease Entering into contracts Buying buildings 15 5

6 Where to get support for becoming incorporated Company limited by guarantee Company limited by shares Community Benefit Society Charitable Organisation Community Interest Company /organisations/office-of-theregulator-of-communityinterest-companies Remember to register with HMRC even if there will be no tax to pay! Incorporation Top Tips Choose the appropriate structure for your club Do it once, do it right Register with HMRC if liable to Corporation Tax Get the right directors Ensure your details are correct and up to date Use the correct details on correspondence / contracts etc. Know your ongoing obligations e.g. annual accounts, annual return. Failure can result in prosecution! 17 Things to consider when changing structure Consider Update Is this the right structure for the whole club? Seeking legal advice Inform Constitution of club Contracts Trusts and deeds All members Bank NGB HMRC 18 6

7 Types of Club Status Which one is best for your club? There are a number of options available: CASC? Charity? Stay as you are? 20 Community Amateur Sports Club (CASC) Does anyone belong to club that is a CASC? Are you considering becoming a CASC? Did you know the CASC rules changed on 1 April 2015? 21 7

8 Community Amateur Sports Club (CASC) Charity type reliefs for local sports clubs Estimated in excess of 100m saving on business rates / 12m in Gift Aid relief Significant changes to CASC introduced April 2015 Can be a CASC and incorporated or unincorporated but beware CASC Guidance on Club Matters site ( ) 22 Key criteria for being a CASC Being open to the whole community Being organised on an amateur basis Encourage participation in a Home National Sports Council recognised sport Setting limits on the costs for members and level of income generation Fit and proper management 23 CASC considerations Key benefits Possible drawbacks Business rate relief (Mandatory 80% relief) May need to change club constitution The ability to generate income through Gift Aid (individuals and companies) Once you ve gone down this route, you can t change back Exempt from Corporation Tax profits if: Form filling in (similar to becoming incorporated) Potential significant cost if club is deregistered Trading income < 50k / year Rental income < 30k / year Exemption from Capital Gains Tax How significant are these benefits for your club? 24 8

9 Case studies Bowls club Number of members Sailing Club Facilities Club house, changing room, bowls green and car park Water/lake, club house, boat shed and boat park Total Annual income 60,000 (no donations) 42,000 ( 3,200 donations) Before CASC Annual rate costs 6,495 Annual rate costs 4,000 After CASC Annual rate costs 1,299 Annual rate costs 800 Gift aid income Charities Regulated by the charities commission Can be any legal structure Has a minimum income of 5,000 a year e.g. funds and donations Need a board of trustees Not for profit purely for charity purposes e.g. The advancement of amateur sports qualifies 26 Charity considerations Key benefits Tax reliefs, including mandatory 80% relief from business rates and special VAT treatment Fundraising: grants may be more freely available to charities, and general perception makes a difference to the amount people donate Possible drawbacks Administrative burden Cannot be pay players or trustees only reasonable expenses 27 9

10 CASC vs Charity Neither Regulator CASC Charity None HMRC Charities Commission Membership Can restrict Unrestricted Unrestricted Profits Able to distribute Can t distribute to members Can t distribute to members Activities No restrictions on activities Limits on social membership and trading income Significant social activity, membership and trading income kept separate Payment of players Yes Yes subject to rules No unless coaching or travel to away matches Tax relief No Some including: Business rate relief Gift Aid Corporation Tax (CT) / Capital Gains Tax (CGT) reliefs Some including: Business rate relief Gift Aid CT / GGT reliefs Some VAT exemptions Gifts of shares and land Additional sources of funding None Gift aid rate relief Gift aid rate relief Note that you can claim back gift aid for membership if a charity but not if a CASC. 28 Gift Aid Overview Gift aid for sports clubs For both CASCs and Charities What you can claim Gift Aid on is different for each If donors are higher rate taxpayers, they can benefit from tax relief Can claim back 25p in every 1 voluntarily donated i.e. for every 1 donated, your club would receive 1.25 Can also donate goods A gift aid declaration form is required and must be returned to HMRC 30 10

11 What can you claim? A football club are a CASC and charge their members 250 per year in membership subscription. Some members choose to pay an extra one-off 50 as a donation but this is not expected of them. What gift aid can be claimed? Membership subscriptions do not qualify for gift aid under CASC. The club can only claim gift aid on any voluntary donations. 31 What can you claim? A volunteer at a cycling club makes a 40 mile trip to do some time trials which cost 20 in petrol. They say the club can keep the expenses as a donation What gift aid can be claimed? Theoretically none as no cash has actually been donated to the club. To claim, the money would need to be processed as an expense and then physically donated back from the volunteer. 32 What can you claim? A cricket club is struggling after a summer of bad weather and finances are looking bad. One of the members offers to give 500 on the condition that if they can pay it back at the end of the year, then they will do so. What gift aid can be claimed? None this is not a donation but a loan. Even if the Club doesn t have the money at the year end and the 500 is never repaid, it is treated as a waived liability therefore it is not eligible for Gift Aid

12 Case study Andy s Bowls Club (ABC) Andy s Bowls Club (ABC) has about 250 regular members and a small surplus in the bank. A retired couple both coach the teams in their spare time and on a voluntary basis and also do the administration for the club. The club owns its own building. All fees paid go towards general improvements of the club and buying equipment and paying referee fees. The club owns a bar that does a roaring trade both from the club and wider village community. Members of the public enjoy taking advantage of the favourable prices. The bar is run by volunteers mid week and paid staff at the weekends. How would you structure this club, and why? 35 Recap and further support 12

13 Recap Why organisation structure matters to sports clubs Types of legal structure unincorporated vs incorporated companies CBS / CIC / CIO Types of status CASC / Charity Gift aid 37 Top tips on changing club structure Use it as an opportunity to work out what the club is about and getting your constitution right Communicate it to appropriate people Consider different sections of your club Think longer term Get the right people taking responsibility Give a clear timeline Talk to others (e.g. other clubs, your CSP) Seek legal advice Do what s right for your club 38 The Club Matters Offer Online support including online toolkits, quick reference guides and e-learning modules, covering four key areas: Club Management, Finances, Marketing and People. Club Matters workshops a series of 5 workshops, delivered locally face-to-face. Club Matters mentoring offers flexible and personal support from a volunteer business professional Club Improvement Tool helps clubs of all sizes and at all stages of their development to establish where they are performing well and where they can develop. Club Views allows clubs to ask members what they think about the club with pre-written or bespoke questions. Clubmark is the universally acknowledged cross sport accreditation scheme for community sports clubs. 13

14 Good luck! This seminar has been prepared to give general guidance for sports clubs as part of the Sport England Club Matters programme. It does not constitute professional advice and you should not act upon the information contained in these slides without obtaining specific professional guidance. These slides are not to be used outside of the Club Matters programme unless delivered in conjunction with Club Matters or with the written agreement of Sport England. No representation or warranty (express or implied) is given as to the accuracy or completeness of the informationcontained in this publication, and, to the extent permitted by law, Sport England, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the informationcontained in this publication or for any decision based on it. The English Sports Council - Sport England 14