CASC Status - rule change

[alastairgott]

Having Read Again the detailed guidence notes the following points are given (my thoughts in red)
https://www.gov.uk/government/publications/community-amateur-sports-clubs-detailed-guidance-notes/community-amateur-sports-clubs-detailed-guidance-notes#social-membership

2.21.4 Examples of ?participating in the sporting activities of the club? are:

participating in an eligible sport organised by the club (Going Caving)


being a match official for an eligible sport for the club (Either a member of a regional Caving Body committee or an Individual who maintains the access for a given cave, by keyholding or negotiating access with the landowner)
coaching club members in an eligible sport (either providing active SRT training to members or alternatively Mulling over potential digs with younger cavers- much like the late John Beck did at the Miners, Eyam on a weekly basis or I have received numerous emails from Pitlamp over the last year about projects)
providing first aid to people playing an eligible sport for the club (Being a member of Cave rescue or aiding with the administration, many people help with the upkeep of gear but may not necessarily be able to be active in the sport)
being an accompanying individual for the club (Being callout for other cavers?, going on a caving expedition with your old University club thereby accompanying them...?)
driving a club vehicle, or a vehicle hired by the club, to transport those persons listed above (...?)
preparing or maintaining club sporting facilities or equipment for use in an eligible sport (fettling drystone walls and other hut things)
Being an officer, or a committee member of the club (...)
Undertaking a relevant training course (SRT, First aid, Pumping, square wooden shaft building, Surveying)

 

[fredthedog]

being a match official for an eligible sport for the club (Either a member of a regional Caving Body committee or an Individual who maintains the access for a given cave, by keyholding or negotiating access with the landowner)

I can entirely see where you're coming from but I wonder if they will draw a distinction between 'being' things and 'doing' things ie only count the activity on days when eg you actually attend a committee meeting, not all the days on which you are a committee member.

I'll be fascinated to see if you can get any sense out of them. Very best of luck.

 

[damian]

alastairgott: I have a suspicion that a lot of what you suggest won't be acceptable because it is not "for the club" e.g. providing First Aid for the club is probably only related to "the club" on rescues involving the club.

Re: being thrown out as a CASC
If you end your CASC, you will presumably wish to set up a new club in the form of a charity and pass on your hut. You will in effect be selling your club's assets on to a another organisation (i.e. the charity you set up to replace the CASC) and should, therefore, be subject to Corporation Tax. However there is an exemption specifically relating to these new requirements. If you write to HMRC before 1 April 2016 explaining you no longer meet the requirements, then as I understand it you are exempted Corporation Tax.

 

[Pitlamp]

being a match official for an eligible sport for the club (Either a member of a regional Caving Body committee or an Individual who maintains the access for a given cave, by keyholding or negotiating access with the landowner)

I can entirely see where you're coming from but I wonder if they will draw a distinction between 'being' things and 'doing' things ie only count the activity on days when eg you actually attend a committee meeting, not all the days on which you are a committee member.

I'll be fascinated to see if you can get any sense out of them. Very best of luck.

Committee members do a lot of work for the club outside of actual meetings. They could not perform their duties without this. For example if a treasurer supplies an annual balance sheet to an AGM this might involve many hours of preparation, which can only be done in advance of the meeting (i.e. on a separate occasion). This might be a good example to throw at HMRC because they, of all people, would understand the importance of robust accounting.

My view is that the issue of whether someone is in more than one club is best avoided altogether. We should assume that if person X goes caving (or does any other qualifying activity) then any CASC club they're a member of can "benefit" from this when accounting for its members' activity levels. (It's unreasonable for HMRC to expect an inter-club distinction to be made in the caving situation - and this approach works to our advantage as well.)

If Damian's right about the corporation tax exemption option, that might end up being the best way to go for at least some caving CASCs.

 

[nickwilliams]

Re: being thrown out as a CASC
If you end your CASC, you will presumably wish to set up a new club in the form of a charity and pass on your hut. You will in effect be selling your club's assets on to a another organisation (i.e. the charity you set up to replace the CASC) and should, therefore, be subject to Corporation Tax. However there is an exemption specifically relating to these new requirements. If you write to HMRC before 1 April 2016 explaining you no longer meet the requirements, then as I understand it you are exempted Corporation Tax.

Having read the notes here:

https://www.gov.uk/government/publications/community-amateur-sports-clubs-detailed-guidance-notes/community-amateur-sports-clubs-detailed-guidance-notes#leaving-the-scheme

it seems this exemption only applies if you transfer to become a charity. Even if you opt to become a charity, presumably stamp duty will be due, as well as the other legal costs associated with any significant property transfer.

Apparently you cannot just opt out of the scheme: you have to show that you are no longer able to meet the requirements for being a CASC, and I doubt HMRC will be prepared to accept that on the basis of "our members can't be arsed with your rules on demonstrating participation". Furthermore, if you are able to show that you are not a CASC then presumably HMRC can come after you for repayment of the benefits which you've had by being treated as a CASC in the period for which you did not qualify.

What may not be clear to some is that if the rules are applied as they appear to be described in the above link then if you do de-register, corporation tax will be chargeable on the value of the property which is transferred from the 'old' club to the 'new' one (presumably less any demonstrable acquisition costs). This could potentially run into a six figure sum for some of our larger clubs who have owned huts in desirable rural locations for decades.

 

[damian]

Thanks for taking the time to have a read, Nick.

Furthermore, if you are able to show that you are not a CASC then presumably HMRC can come after you for repayment of the benefits which you've had by being treated as a CASC in the period for which you did not qualify.

Yes, but there are new rules from 1 April 2015. Between 1 April 2015 and 1 April 2016 is a special transition period. If during that time you decide you do not meet the new rules, they will deregister you without financial penalty (which I assume also means Stamp Duty).

What may not be clear to some is that if the rules are applied as they appear to be described in the above link then if you do de-register, corporation tax will be chargeable on the value of the property which is transferred from the 'old' club to the 'new' one (presumably less any demonstrable acquisition costs). This could potentially run into a six figure sum for some of our larger clubs who have owned huts in desirable rural locations for decades.

But as I understand it, not if you do so before 1 April 2016 having been fully compliant before 1 April 2015, but now finding the new rules don't fit you.

 

[nickwilliams]

The guidance I linked to is provided by the god-awful Cabinet Office internet delivery team, so it's written by half-wits for the hard of thinking and cannot be taken to be a reliable or accurate representation of what HMRC will actually do. (These are the people who completely fucked up the rural payments system earlier this year.)

So far as I can see the main impact of de-registering is the potential for clubs to be unable to claim a discount on the rates they pay on their hut.

1. Can anyone give me examples of what that cost is actually likely to be in real terms?

2. Are there any clubs out there who currently get a discount without being CASC registered?

3. What other impacts of de-registration are there likely to be?

 

[Peter Burgess]

Is this another example of how caving loses out because it is a rare non-competitive sport? If a club is set up in a competitive sport, it should be pretty easy to see who is active and who is not, because, presumably, records are kept of competitions, matches, tournaments, races etc  etc.

I guess most clubs have a log book though?  We might need to ensure that we all use it!

My club (not affected by this as we are a charity) only has a mandatory log of members who stay in The Stump. Members are encouraged, but not obliged, to write up their activities either in a log book or in an online journal. We would never dream of making this an obligation - there are far too many obligations imposed on us already and we do not intend to add even more. With a large membership it is unreasonable to expect everything done by members to be logged somewhere. Members "do their own thing" and Big Brother (i.e. "the club") is happy for them to do so without notifying everyone, provided they do not bring the club into disrepute.

I still feel this is a case of a "sport" being non-competitive and not fitting the mould of what an office-bound bureaucratic couch potato considers a "sports" club to be.

 

[Cookie]

So far as I can see the main impact of de-registering is the potential for clubs to be unable to claim a discount on the rates they pay on their hut.

1. Can anyone give me examples of what that cost is actually likely to be in real terms?

2. Are there any clubs out there who currently get a discount without being CASC registered?

3. What other impacts of de-registration are there likely to be?

Re item 2. In the past the Wessex (not a CASC) has received a discretionary rebate on their rates. I can't tell you if we currently do. The amount has varied from year to year with no apparent logic but on the whole Somerset Council have been reasonably generous. However, as the name suggests, it is discretionary so can't be relied upon. 

 

[Cookie]

If Damian is right (I hope he is) that the transition rules allow a genuine tax free escape from CASC then that is an opportunity to be seized before the next random rule change comes along.

 

[Aubrey]

Re item 2. In the past the Wessex (not a CASC) has received a discretionary rebate on their rates. I can't tell you if we currently do. The amount has varied from year to year with no apparent logic but on the whole Somerset Council have been reasonably generous. However, as the name suggests, it is discretionary so can't be relied upon.

The 75% discretionary rate rebate enjoyed by the Wessex was withdrawn last year. The council said we could only continue to receive it if more than half our members were local rate payers.
We still get 50% rebate  as a "small business"  under central government rules.

 

[Jenny P]

So far as I can see the main impact of de-registering is the potential for clubs to be unable to claim a discount on the rates they pay on their hut.

1. Can anyone give me examples of what that cost is actually likely to be in real terms?

2. Are there any clubs out there who currently get a discount without being CASC registered?

3. What other impacts of de-registration are there likely to be?

Firstly, many thanks to Damian for flagging up this most important change in legislation!  My club is a CASC and knew nothing about this and have not received any information sent to us officially.

Orpheus C. C. was encouraged to become a CASC by Derbyshire County Council when the option was first available because it allowed them to claim back from HM government the 80% rate rebate they gave the Club on our HQ.  Prior to this we were given a 100% rate rebate anyway (as were many other sports clubs in Derbyshire) but DCC footed the bill for this themselves.  In fact we still have a 100% rate rebate but DCC only has to cover 20% of that, the government covers the rest.  From memory, I believe the sum for OCC would be around ?3,000 per annum if we had to pay full rates because the figure is always quoted on our rates form every year, and then there is the bit which says we have the rebate.

Before we set this up and made the necessary changes to our constitution we consulted the HMRC office in Derby and explained exactly what the club was and what its HQ was.  We went ahead only after making the necessary changes to ensure that we complied with the rules as they were then.  If they have now changed the rules or added some new rules so that we can no longer comply, they presumably must have this in mind in giving a period of grace during which we can withdraw from the system with no penalty.  It would mean we would in future have to pay rates in full (unless DCC went back to allowing a discretionary rebate) but I can think of no other advantage we have currently which we would lose.

I assume this will also hit mountaineering clubs with Huts in Lakes as well - does it also apply to Scotland and Snowdonia or is this an "English" problem.  (Sorry, currently abroad with dodgy internet so no chance to study the various websites quoted.)  It would be worth checking with BMC how they are going to tackle this because it will affect far more of their people as there must be hundreds of club huts belonging to climbing and mountaineering clubs.

The other point is that this is surely aimed at those large sports clubs (rugby clubs, golf, clubs and the like) which own a club house or pavilion with a bar and sometimes  restaurant (often open to the general public) and also own a substantial piece of land with a "pitch", training facilities, golf course, etc.  AFAIK this situation doesn't apply to caving or climbing club huts which are effectively "hostels", having the sole purpose of providing accommodation for members (and guests) who take part in an outdoor pursuit which can only take place in certain geographical areas and for which members living outside such areas of country may have to travel considerable distances to be able to take part.  In fact our club premises is classed as a "hostel" under local planning regulations and we have had to comply with various rules about what we were able to do in the way of building works because of related safety issues.

Someone mentioned the "law of unintended consequences" and it seems like this legislative change is a case of someone up top not going in for joined up thinking!

 

[damian]

Thanks for your email, Jenny.

BCA is working on this in the background and will share all findings with affected Clubs. Please let me know if your Club is a CASC and I will add you to the list. At the moment I know of four large, well-established Clubs.

 

[alastairgott]

Damian, could you possibly add the TSG to your list.

 

[damian]

Damian, could you possibly add the TSG to your list.

Already on the list, but if you'd like to add another contact, let me know.

In fact thanks to the HMRC list of CASCs, and someone else's detective work, there seem to be 7 caving CASCs. BCA will be writing to them all shortly.

 

[HardenClimber3]

I suspect part of the goal of the new rules is simply to save money (so much for the Big Society).
The CASC rules don't really fit easily with Caving Clubs, but then we're too small a sport for the Sports Council to pay much attention to, let alone HMRC. (Sounds a bit like some of the discussion about University Clubs, with similar solutions).

Inland revenue are quite thorough in their research...it wouldn't surprise me if they look here is they are evaluating an application. They will certainly look at your club's website, and they are not impressed with attempts to discuss the regulations (about children, for example). They will give advice on what they want (and don't) want to see.

 

[oldboy]

Our club has looked at this already and had decided that we could assume that the percentage of members who were "active" was in line with those who had asked us as part of their membership subscription to register them as "Cavers" for PL insurance as opposed to "Non-Cavers"

Would that assumption be correct?

 

[damian]

Our club has looked at this already and had decided that we could assume that the percentage of members who were "active" was in line with those who had asked us as part of their membership subscription to register them as "Cavers" for PL insurance as opposed to "Non-Cavers".Would that assumption be correct?

You have a PM.

 

[Robert Scott]

Hello Damian
Are the HMRC looking at "Caving" or Club Objectives?
One club's objectives (as accepted by HMRC) are stated as -
"The main objects of the Club shall be to provide facilities for and to promote participation in the amateur sport of caving and related pursuits in the Yorkshire Dales."
One suspects "related pursuits" would include a raft-load of non-caving activities.
And to "to provide facilities for and to promote participation in" does this include a monthly visit to the club hut or accessing the club website?

Now I cease to wonder why taxation lawyers earn huge amounts of money.

 

[alastairgott]

Robert Scott!

The Guidance becomes a little more difficult when you start talking about multiple sports, please see annexe 3 on multi sports clubs. I have not actually read a lot of this, but I guess it doesn't include forum activity or visiting the countryside.

https://www.gov.uk/government/publications/community-amateur-sports-clubs-detailed-guidance-notes/annex-3-multi-sports-clubs