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Support: Clubs : Club Requirements

Structures and Governance

Whether initially establishing a club or reviewing the governance of an existing club, the committee and members must choose the most suitable legal structure.

As this is a multifaceted topic it is highly recommended that clubs seek professional advice before committing to any changes.

The Unincorporated Association

An unincorporated association is an informal structure relatively low in cost. Due to its simplicity the option of an unincorporated association is one chosen by many. However, it does have one major drawback; it is not a separate legal entity.

This causes problems; the main ones being:

  • The association cannot own property, so trustees need to be appointed to legally own the property and sign document when dealing with the property;
  • The association cannot enter into contracts, so trustees need to sign on behalf of the association;
  • The trustees and the members of the association are personally liable for their acts or omissions;
  • Insurance is often sought to protect the members and trustees against their personal liability.

An unincorporated association often works well with few problems. However if things go wrong the potential for its trustees being personally liable is a daunting prospect, and one that is likely to put off candidates for these roles. It may also be that prospective members are put off by the possibility of personal liability for their acts or omissions in relation to the association.

Incorporation - A Company Limited by Guarantee

There are other options available to clubs and one such option is a company limited by guarantee. A company has its own legal identity, separate from its members and directors. The liability of each member is limited to a nominal sum (usually £1), which he or she guarantees to pay if the company has debts on winding up.

As it has a separate legal entity the company can:

  • Hold property;
  • Enter into contracts; and,
  • Take legal action in its own name

The fact that property can be held by the company is potentially a big advantage as it removes the practical issue of changing a trustee when a trustee wants to retire.
Although there are benefits of incorporation, there are a few negatives. The big three are cost (start up and ongoing), bureaucratic obligations and loss of privacy. Incorporating a company may cost several hundred pounds in legal fees and Companies House fees. A company is governed by the Companies Act which means it must file annual returns (plus £30) and annual accounts; as well as notifying Companies House if there is a change to a director or to the constitutional documents. Also all information sent to Companies House is available to the general public to view.

Community Amateur Sports Club

What is the CASC scheme?

The Community Amateur Sports Club Scheme (CASC) enables many local amateur sports clubs to register with the HM Revenue & Customs (HMRC) and benefit from a range of tax reliefs, including business rate relief and Gift Aid. There are now more than 6,000 registered CASC's and these clubs have benefitted from almost £100 million in savings.

What are the advantages of CASC?

  • 80% mandatory business rate relief.
  • The ability to raise funds from individuals under Gift Aid.
  • Full exemption from Corporation Tax on capital gains and interest.
  • Some exemptions from Corporation Tax on income of less than £30,000 pa.
  • Some exemptions on property income if gross property income is under £20,000 pa.

Is my club eligible?

The conditions for becoming a CASC are fairly easy to meet. Your club must fit in with these in practice as well as having these as requirements in the club rules and constitution. Your club must:

  • be a sport recognised by the sports council (e.g Sport England or Sport Scotland, Sport NI or Sport Wales)
  • be open to the whole community
  • be organised on an amateur basis
  • be non-profit making
  • have as its main purpose providing facilities for, and promoting participation in one or more eligible sports
  • meet the location requirement
  • be managed by 'fit and proper persons'

Where can I find out more information?

HMRC website: http://www.hmrc.gov.uk/casc/casc_guidance.htm

CASCinfo website: http://www.cascinfo.co.uk

Entering the CASC scheme is a decision that should not be taken lightly. For some clubs, joining the scheme may not be the best option. Clubs are encouraged to seek professional advice before applying or making any changes to the set up of the club.

Charity Status

Clubs may be able to register as a charity as long as they can show that they are under the charitable pursuit of promoting health.
"Charitable status brings with it considerable advantages in terms of recognition and financial support. Charities have access to the full range of charity tax reliefs, including donor incentives of payroll giving and gifts of shares, wider exemptions on their own income and mandatory business rate relief. They also have access to greater funding opportunities, including grants from other charities, such as community foundations, and public bodies which fund charitable activities. Charities are able to enjoy those benefits as soon as they establish themselves as a charity.

Visit the following websites for more information and guidance:

The Charity Commission made a decision to recognise as charitable the promotion of community participation in healthy recreation by providing facilities for playing particular sports. (By 'facilities' they mean not just land, buildings and equipment, but also the organising of sporting activity.) The guidance is aimed especially at community amateur sports clubs (CASCs). See RR11 - Charitable Status and Sport for more information, available from www.charity-commission.gov.uk

Information taken from www.charity-commission.gov.uk, retrieved 5 July 2011.

See also becoming a Community Amateur Sports Club.

Summary

If a club is of a reasonable size, and owns property, the benefits of incorporation or charity status outweigh the negatives. The release of trustees from personal liability is a very attractive prospect. The company or charities' ability to hold property also avoids practical problems with trustees. An unincorporated association can not own any property or enter into contracts.

For a smaller club, however, the unincorporated structure may be best as the draw-backs of incorporation and/or tax returns (required for CASC and charity status) may mean that it is not worth incorporating unless there are compelling reasons.

The information provided is a merely a guide and was correct at the time of publishing. Each club has to decide for itself which option is best for its own structure. Clubs are advised to check the up to date position and seek further professional advice and information.

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