News & Views

CASC or Charity status - Which is best for your sports club?

Running a club is not an easy job. With the senior members often having so many tasks to consider, it is easy to forget to occasionally take that step back and check that the overall operation of the club is still fit for purpose.

One of the key points to consider is whether the club has the most effective structure and status to ensure that it is getting the best benefits and tax reliefs available. Given that a club cannot have both a CASC status and a charity status, the merits of each need to be considered.

CASC status

CASC stands for ‘Community Amateur Sports Club’ and this is a status that HMRC can award to organisations, rather than being a type of organisation itself. Applications can be made to HMRC on behalf of existing clubs along with the supporting documents (accounts, bank documentation, club rules or articles etc) which demonstrate that they meet certain criteria to qualify for the CASC status:

• Operate within an eligible area.
• Promote participation in eligible sports.
• Operate via a formal constitution with your ‘governing document’.
• Run by a fit and proper person.
• Remain open to the whole community without discrimination.
• Operate as an amateur club only on an amateur basis.
• Operate on a not-for-profit basis.
• Comply with the membership, player payments, and club income thresholds.

Provided that your club meets the criteria, then whether your club is incorporated does not matter. HMRC can grant the status, and your club will be able to benefit from tax relief on sums spent for ‘qualifying purposes’ such as gift aid donations, trading profits (below a certain threshold), capital gains etc.

Charity status

‘The advancement of amateur sports’ is considered by the Charity Commission as an acceptable charitable purpose for any entities looking to register as a charity. Therefore, a club which is established for ‘the advancement of any sports or games which promote health by involving physical or mental skill or exertion and which are undertaken on an amateur basis’ could consider registering their entity as an official charity. Once registered as a charity, then registration with HMRC can follow, for which certain tax benefits can then be applied.

Which status is best for your sports club?

Each club will have its own personal set of circumstances and preferences as to how to function, but some key considerations on which route to choose are:

• Registration & Regulation: In terms of application and registration, applying for CASC status via HMRC is a one-off process, whereas being registered with the Charity Commission means that there is an ongoing regulatory obligation on the club to maintain certain records and reports into the Charity Commission.
• Tax benefits: As noted above, having either CASC status or charity status can result in having certain tax benefits applied to the club’s revenues. Whilst both can claim gift aid, it is worth noting that different tax benefits apply to each, therefore careful consideration is required as to how those tax reliefs will apply to the types of income being received by your club.
• Operation: One of the differences between the application processes is that CASC application with HMRC can only be applied to a club that already exists. Charity applications can be made by existing clubs or those looking to set up a club, as the Charity Commission can consider applications of how a club is proposed to be operated.
• Caps: The revenues or income received by a club always need to be monitored closely and reported on, but for CASC status, having income from non-member trading that exceeds £100,000 in a year will invalidate the CASC status, and measures would need to be taken to reduce the figure or otherwise reallocate the sums (e.g. through a trading subsidiary) to ensure that CASC status is maintained and the ongoing tax benefits can be applied.
• Incorporation: The type of organisation that you choose to run your club by can affect your decision too. Registration as a charitable incorporated organisation (CIO) or community interest company (CIC) for example, means that the individual members of a club are not personally liable for a club that is not incorporated. Different criteria apply to each organisation type and due consideration needs to be made to ensure that the preferred structure of the club can match the right type of organisation. See our previous article on the risks of being an unincorporated sports club here.

Changing status

Given that a charity cannot have CASC status or vice versa, then certain processes would need to be followed to ensure that the club’s structure and practices can be changed properly to transition from one to the other. For example, CASC registration is intended to be a one-off exercise for a club and that club can only then be deregistered if the conditions for CASC status are exceeded or if the club chooses to wind up. The assets of a club can however be transferred from one entity to another through the proper paperwork, and so if a club wished to change from one to another, then a separate entity could be created to meet the new purpose and the existing club’s assets transferred.

How do you decide?

Only you can fully understand the inside workings and preferences of your club, and we can support you in your decision-making process and with any applications or organisational changes required.

For further information, please contact Philip Bowers or Mark Hughes or call 0151 906 1000.