INCORPORATION - PROTECT THE PEOPLE RUNNING YOUR CLUB Dave Stubley RFU Funding and Facilities Manager Is your rugby club a risky business? Do you know how your club is constituted/legal status of your club?
INCORPORATION - PROTECT THE PEOPLE RUNNING YOUR CLUB Dave Stubley RFU Funding and Facilities Manager
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INCORPORATION - PROTECT THE PEOPLE RUNNING YOUR CLUBDave Stubley RFU Funding and Facilities Manager
Is your rugby club a risky business?
Do you know how your club is constituted/legal status of your club?
What does that mean to you and your fellow committee members or trustees if a legal claim was brought against the club?
The RFU strongly recommends that club/CB should be incorporated to protect its most valuable asset – you, the army of volunteer club administrators
Incorporation of Rugby Football Clubs
Constitutions used by Rugby Clubs currently
Unincorporated Members Clubs
Limited Company (by guarantee or shares)
Industrial and Provident (IPS)
Guidance not just aimed at Clubs but CB’s as well
Incorporation – why incorporate?
An unincorporated club has no legal identity of its own
As a result if it employs people or undertakes activities (eg organising matches), individuals (usually the Committee) will have to act on its behalf
If club holds property, it will have to appoint trustees to do so
If claims are brought they would be against Committee members personally, who would be personally liable if the Club’s assets do not exceed the liability
Rugby is a contact sport and although personal injury on the pitch is rare it does happen and accidents of any kind can occur in any rugby environment and claims against clubs are a real possibility
Incorporation – why?
“Don’t just imagine that insurance will cover you for all eventualities.
Incorporation is the first line of defence, insurance is the second”
Why incorporate – live example
Pursued by woman who claimed she damaged her arm while using the bridge over the culvert.
Settled out of court
Money raised by members and brewery loan to meet the claim
Committee members were jointly and severally liable for any claim
If it had been a large claim then even house/savings could have been at risk.
Club is now IPS and CASC registered
Incorporation – what form should the club take?
Two options for non profit making clubs
Company Limited by Guarantee
Industrial and Provident Society
In either case the Rugby club will have a legal personality of its own and as such can enter contracts, hold property, sue and be sued in its own name.
Are there disadvantages?
Companies and IPS are regulated by Companies House and the Financial Services Authority (FSA) respectively
The constitution and accounts will need to be lodged each year – but these have to be filed with the CB anyway
The advantages outweigh the disadvantages
How does a club incorporate?
Incorporation involves establishing the new company and then transferring the assets and undertaking of the club to it.
Appoint a steering group and decide the timescale
Tell your members that it is planned
Prepare the Memorandum and Articles using the relevant RFU template/ model rules
Look at CASC compliance at same time
Apply for clearance from HMRC for the incorporation
Prepare the resolution of the members to transfer the assets and undertaking to the new company.
Call and hold general meeting in accordance with your rules
Incorporation – key points
Information and model rules on www.rfu.com/community under Club Management section, however
Clubs need to take there own legal advice
Link it in most cases to CASC registration
CD Rom and newsletter distributed to the game
COMMUNITY AMATEUR SPORTS CLUB (CASC)Save money for your Rugby Club!!
Barnsley RUFC – an example
CASC registered April 2004
To date saved £32,000 + in relief from business rates
“CASC status hasn’t changed anything we do at the club. Its just made running the club that bit easier financially”
Ilkey RFC – an example
£2000 per year saving from Business Rate Relief
Over 2 years received £7,900 in gift aid refunds on 2 donations
Have found that trusts that only give to charities have extended this to registered CASC’s
“the most important benefit has been ability to claim tax paid at basic rate on all donations under Gift aid. The process is simple …. I can’t understand why all amateur sports clubs have not registered”
CASC – National Picture
4,882 sports clubs are now registered with an estimated £43.6m worth of savings (Deloitte)
320+ rugby clubs are now registered with an estimated saving of £4,000 per club
1 rugby club has saved capital gains tax on ground sale of £6.5m by being CASC registered
CASC - Background
2001 campaign for tax benefits for sports clubs provide HMT with 2 amendments
Sports clubs could register as charities
Sports clubs could register as CASC
Schedule 18 of Finance Act 2002 established CASC
2003 Local Government Act registered CASC’s to claim 80% mandatory rate relief
2004 threshold exemption for corporation tax raised
CASC – The Benefits
80% mandatory business rate relief
Gift aid on individual donations (28p in the £ currently)
Corporation Tax exemption on profits derived from trading activities if trading income is under £30k PA
CASC – The Benefits
Corporation Tax exemption on profits derived from property income if gross property income is under £20k PA
Tax free income from interest and capital gains (used for qualifying purposes)
Avoidance of Capital Gains on sale of land
CASC - Criteria
Decision should not be taken lightly
Financial advantages for many
For some not the best option
Link the decision making process to incorporation discussion
RFU model rules for IPS and Ltd by Guarantee offer CASC compliant rules that have been agreed with HMT and HMRC
CASC - Eligibility
Club must be open to whole community without discrimination
Fees must be affordable
Club must be Amateur
Be non profit making and reinvest any profits back in the club
Can only provide ‘ordinary benefits’ of membership
Constitution must require assets on dissolution be applied for similar purposes
Purpose of club to provide facilities for rugby
CASC - Issues
Club constitution / model rules
“Once a CASC always a CASC”
Deregistration provisions can trigger Capital Gains Tax liability
This specifically safe guards against future distribution of profit to members
But also takes into account clubs that may no longer be adhering to CASC principles
How to become a CASC
Read and discuss the guidance notes from HMRC and decide if CASC registration is right for your club
Look at club’s constitution – does it fulfil criteria set out in the guidance notes – make use of RFU model rules
If you are happy that CASC registration is right and that the constitution is right complete and submit the HMRC application form
CASC – for information
Be aware of ‘Subs for Clubs’ campaign
Be aware of Discretionary rate relief
CASC benefits for clubs that pay players
Top rate tax payer
Vice Presidents/ Social members
CASC – where to go for further information
Download all the key forms and guidance booklets
Learn how to maximise Gift Aid
Access CASC Q & A’s
Keep track of news of the scheme
Register for regular updates
Talk to other clubs via online forum
CASC – where to go for further information
club management section
RFU sample rules for Industrial and Provident Society qualifying as CASCs
RFU sample Memorandum & Articles of Association for Rugby Clubs constituted as a company limited by guarantee qualifying as CASCs