Corporation Tax and your club

Whether your club is incorporated or not, you may face a Corporation Tax (CT) bill if you have an income or a means of gains which are taxable under tax law

sailing club in action

Clubs which have benefited from the Coronavirus business support grants from their Local Authority (LA) should be aware that these grants are subject to tax. This means that clubs which in the past may have not had to file CT returns may now have to do so.

Here's an example

A RYA affiliated club contacted the RYA after receiving nearly £29,000 in LA grants. The club had not previously filed CT returns and faced a potential CT bill of nearly £5,500 for the past two years.

The club’s Treasurer was directed to CT specialist, Richard Baldwin, who provided an initial free consultation. Following this, the Treasurer was able to ascertain the tax implications for their club and was able to report back to the Club’s committee. 

The club then engaged Richard on a fee-paying basis to advise on CT. Richard’s assignment was to assist with the CT position for years that the club had received the grants with a view to minimise their CT liabilities.

Filing corporation tax

To file for CT, clubs must first register online with HMRC. Before being able to file online a Unique Tax Reference number (UTR) is required from HMRC; if the club is not incorporated then this must be obtained by writing to HMRC. Richard helped the Treasurer of the club with the drafting of this letter, and a UTR was subsequently issued.

A detailed review of the club’s Accounts by Richard followed, and an approach was developed for identifying the tax-deductible expenses which would be acceptable to HMRC.

The result

Through this work, Richard and the Treasurer were able to ascertain a total expense deduction for tax purposes over the two years of £9,197, a tax saving at the applicable 19% CT rate of £1,747.

In addition, a tax deduction for Grassroots sport expenditure was identified for each year up to a maximum of £2,500 giving rise to a potential further total saving of nearly £700 in tax.
The club was then able to successfully file the 2020/21 tax return Form CT 600.

Testimonial for the services provided

After the initial free consultation

“I also wished to … thank you and the RYA for providing the facility of an introduction to Richard - another great service from the RYA.”

After the end of Richard’s assignment

“I cannot recommend Richard highly enough to our club for the help he has given me on the club’s behalf and also to you at the RYA and the wider membership. Highly informed, pragmatic and a pleasure to work with.”

If your club has a Corporation Tax enquiry. Contact Richard Baldwin | 01494 730059.