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Legal Update 

white sail boatCompany Law-Register of People with Significant Control

From 6th April 2016 companies, Societates Europaeae (SEs) and Limited Liability Partnerships (LLPs) must keep a register of individuals or legal entities that have control over them. This is in addition to keeping other information, such as a register of members and a register of directors.

Further provisions will come into force on 30th June 2016, which will require this PSC information to be filed at Companies House as part of the entity's confirmation statement (which replaces the annual return from this date).

The requirement to keep a Register of PSCs is set out in Part 21A and Schedules 1A and 1B of the Companies Act 2006 (as inserted by the Small Business Enterprise and Employment Act 2015) and the Register of People with Significant Control Regulations 2016.

Currently the requirement to keep a PSC register only extends to companies incorporated under the Companies Act 2006 i.e. companies limited by shares and companies limited by guarantee, SEs and LLPs. This means it does not currently extend to co-operative societies, community benefit societies and Charitable Incorporated Associations but does include Community Interest Companies and some registered charities.  If your club is a charity which is also incorporated under the Companies Act 2006 it is subject to the new rules on PSCs. 

There is no conflict between this new legislation and the Data Protection Act because, personal data is exempt from the second, third, fourth and fifth data protection principles in Schedule 1 to the Data Protection Act 1998 where the data controller is obliged by an enactment (in this case, Part 21A of the Companies Act 2006) to disclose the information or make it available to the public, whether by publishing it, by making it available for inspection, or otherwise (see sections 34 and 35 of the Data Protection Act 1998). 

If a company and/or its directors are found to be in breach of the legislation it may result in a fine or imprisonment or indeed both.  If individuals fail to provide your company with the information you need, they may be committing a criminal offence and you may also be able to freeze their interest in your company, where they have one.

What action do clubs need to take:

You must take reasonable steps to determine whether any individual meets the conditions for being a PSC in relation to your company, and if so, who that person is.

We suspect that the majority of our clubs are likely to find that they do not have any PSCs, however, the PSC requirements apply whether your company has a PSC or not.  If you have taken all reasonable steps and are confident that there are no PSCs in relation to your company, you must enter that fact on the PSC register. The register must say that:

“The company knows or has reasonable cause to believe that there is no registrable person or registrable relevant legal entity in relation to the company.”

You must keep information on your company’s own PSC register up-to-date.

As well as statutory Guidance for the PSC Register, the Government has published non-statutory Guidance for companies for the Register of People with Significant Control -  which helpfully explains the legislation and sets out the requirements under it. 

Revaluation of Rateable Values

Clubs will recall that the legal update in the April edition of The Club Room explained the revisions to the Small Business Rate Relief scheme and how clubs may rely on the ‘ability to pay’ criteria within the VOA’s guidance.

The guidance establishes that if it can be shown that the only occupier of a sports facility is the club then the rateable value of the clubhouse or ground must reflect that club’s ability to pay. The rating system requires that every property is assessed in its existing physical state and alternative uses are generally ignored. This means for rating purposes a sailing club must be considered as a sailing club.

The Sport and Recreation Alliance recently carried out a brief review of rates which found that only around 6% of ‘clubhouse’ assessments were in excess of the new exemption threshold of £12,000.  However, it is likely that there will still be a number of sailing clubs that will be liable to pay rates after the 2017 revaluation.  Many clubs are now unable to qualify for CASC status and the 80% mandatory rate relief it affords and discretionary rate relief is extremely limited, all of these factors could mean that rates become a real issue going forward.

Details of the new rateable values will be published in September and the VOA are suggesting that any new assessments which are causing difficulties could be reviewed between September 2016 and March 2017 without invoking the new, costly and laborious appeal procedure.

Although there will be some form of transitional relief scheme that will phase in changes in liability, 2017 rateable values will form the basis of rate bills until at least 2022.  Mark Radford a Rating Expert with Savills has advised us that ability to pay will be a major opportunity for clubs to have their assessments reviewed.

There are three tests which clubs can use to gauge if their new rateable value is too high:

1. Will the size of the new rate bill cause the club any financial hardship?

2. Is the new rateable value equal or greater than any surplus of ordinary income over ordinary expenditure?

3. Is the new rateable value more than 20% of turnover?

It is essential to watch out for the VOA’s publication of the new rateable values in September and contact the Legal Department to discuss your position.

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