Understanding the options for Club Structures

Welcome and introductions

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

What we’ll cover

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Why organisation structures matter to sports clubs

What is it and why does it matter?

Why is it important to have the right structure?

1. Protection for those involved in running clubs

2. Save money - tax benefits

3. Promotes good governance

4. Important to people outside of the club

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Organisation structure = how a club is viewed in the eyes of the law

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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?

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Types of Legal Structures

Unincorporated versus incorporated

Unincorporated 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/CharityCommission

Governance requirements

No legal requirements Legal requirements

Statutory requirements

Operate within them Operate within them and any additional legal requirements

Unincorporated Incorporated

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Benefits and drawbacks

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Unincorporated Incorporated

• No formal legal requirements

• No extra admin

• Not a legal entity

• Unlimited liability

• Increased personal risk

✓

x

• More formal structure

• Promotes good governance

• Limited personal liability

• Viewed well by external parties

• Formal legal requirements

• Admin (e.g. annual return / annual accounts)

• Responsibilities of Directors

✓

x

Unincorporated

Unincorporated association

Company limited by guarantee

Company limited by shares

Community Benefit Society

Charitable Incorporated Organisation

Type of Organisational Structure

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Incorporated

Knowledge quiz

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Match the statements to the different types of structure. Insert the number in the relevant box.

Company limited by guarantee

Company limited by shares

Community Benefit Society

Charitable Incorporated Organisation

Unincorporated association

Unincorporated Incorporated

3. No separate legal entity

10. Individual has unlimited liability

6. No formal legal requirements 1. Owned by the members

9. Liability limited, often to £1

8. Owned by shareholders

7. Operate on 1 member 1 vote system2. Must be for the benefit of the community

4. Combines charitable status and an incorporated entity in one structure

5. Can be public or private

8. Owned by shareholders

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Company limited by guarantee

Company limited by

shares

Community Benefit Society

Charitable Incorporated Organisation

Unincorporated association

Unincorporated Incorporated

3. No separate legal entity

10. Individual has unlimited liability

6. No formal legal requirements

1. Owned by the members

9. Liability limited, often to £1

5. Can be public or private

7. Operate on 1 member 1 vote system

2. Must be for the benefit of the community

4. Combines charitable status and an incorporated entity in one structure

Community Interest Companies

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Community Interest Company

• Benefit the community – assets tied in

• Can be profit making• Submit a Community Interest

Statement• No tax benefits

Company limited by guarantee

Company limited by shares

Community Benefit Society

Charitable Incorporated Organisation

Incorporated

When it is suitable

Generally suitable if:

• Employ staff

• Apply for finance (loans or grants)

• Own assets

• Entering into contracts

• Taking on a lease

• Buying buildings

Generally suitable if:

• Small local club

• Don’t own assets (property etc.)

• Don’t take on any contracts

• Not involved in high risk sport

• Protected fully through 3rd party insurance

Unincorporated Incorporated

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Where to get support for becoming incorporated

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www.companieshouse.gov.uk/

Remember to register with HMRC – even if there will be no tax to pay!

http://www.hmrc.gov.uk/ct/getting-started/new-company/start-up.htm

www.fca.org.uk/firms/firm-

types/mutual-societies/industrial

Company limited by guarantee

Company limited by

shares

Community Benefit Society

Charitable Incorporated Organisation

www.charitycommission.gov.uk/

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https://www.gov.uk/government

/organisations/office-of-the-

regulator-of-community-

interest-companies

Community Interest Company

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!

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Things to consider when changing structure

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Consider• Is this the right

structure for the whole club?

• Seeking legal advice Inform

• All members

• Bank

• NGB

• HMRC

Update• Constitution of

club

• Contracts

• Trusts and deeds

Types of Club Status

Which one is best for your club?

There are a number of options available:

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CASC? Charity?

Stay as you are?

Community Amateur Sports Club (CASC)

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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?

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 (http://www.sportenglandclubmatters.com/club-planning/club-structure/casc/)

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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

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CASC considerations

Key benefits

• Business rate relief (Mandatory 80% relief)

• The ability to generate income through Gift Aid (individuals and companies)

• Exempt from Corporation Tax profits if:

• Trading income < £50k / year

• Rental income < £30k / year

• Exemption from Capital Gains Tax

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Possible drawbacks

• May need to change club constitution

• Once you’ve gone down this route, you can’t change back

• Form filling in (similar to becoming incorporated)

• Potential significant cost if club is deregistered

How significant are these benefits for your club?

Case studies

Bowls club Sailing Club

Number of members 160 185

FacilitiesClub 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 CASCAnnual rate costs

£6,495Annual rate costs £4,000

After CASCAnnual rate costs

£1,299Annual rate costs £800Gift aid income £800

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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

http://www.charity-commission.gov.uk

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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

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Possible drawbacks

• Administrative burden

• Cannot be pay players or trustees -only reasonable expenses

CASC vs CharityNeither CASC Charity

Regulator 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

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Note that you can claim back gift aid for membership if a charity but not if a CASC.

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 donatedi.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

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Membership subscriptions do not qualify for gift aid under CASC.

The club can only claim gift aid on any voluntary donations.

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?

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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?

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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.

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?

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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.

Case study

Andy’s Bowls Club (ABC)

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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?

Recap and further support

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

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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

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The Club Matters Offer

Club Matters workshops are free, short training sessions delivered across the country by experts in a range of specific areas.

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.

Clubmark is the universally acknowledged cross sport accreditation scheme for community sports clubs.

Online support including online toolkits, quick reference guides and e-learning modules, covering four key areas: Club Management, Finances, Marketing and People.

Club Views allows clubs to ask members what they think about the club with pre-written or bespoke questions.

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 information contained 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 information contained in this publication or for any decision based on it. © The English Sports Council - Sport England