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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?

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incorporation protect the people running your club dave stubley rfu funding and facilities manager
INCORPORATION - PROTECT THE PEOPLE RUNNING YOUR CLUBDave Stubley RFU Funding and Facilities Manager
is your rugby club a risky business
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
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
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
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
Why incorporate – live example
  • Weymouth RFC
    • 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
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
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
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
incorporation steps
Incorporation steps
  • 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
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
barnsley rufc an example
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
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
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
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
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 benefits18
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
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
CASC - Eligibility
  • Open membership
      • 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
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
How to become a CASC
  • Straightforward
  • 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
CASC – for information
  • Be aware of ‘Subs for Clubs’ campaign
  • Be aware of Discretionary rate relief
  • CASC benefits for clubs that pay players
  • Gift Aid
      • Top rate tax payer
      • Volunteer expenses
      • Vice Presidents/ Social members
      • Auctions
      • Legacies
      • Sponsored events
casc where to go for further information
CASC – where to go for further information
  • www.cascinfo.co.uk
  • 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 information25
CASC – where to go for further information
  • www.rfu.com/community
  • 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