HMRC letter to Community Amateur Sports Clubs (CASC): Next steps

Richard Baldwin, MBE; FCA; CTA, Corporation Tax Specialist talks us through the recent ask from HMRC to CASC registered clubs. 

Background of CASC

Many RYA affiliates are registered with HMRC for special tax status under the Community Amateur Sports Clubs (CASC) scheme. Registration delivers many tax related benefits, including 80% mandatory business rates relief, corporation tax exemptions, access to gift aid, the gift aid small donations scheme, and inheritance tax reliefs. 

Certain conditions must be met by a club in order to register, these were tightened with effect from April 2015. To continue to benefit from registration it is important that a CASC continues to satisfy the qualifying conditions. HMRC is tasked with administering the CASC scheme and is asking clubs registered as CASCs to undertake a review to confirm continuing eligibility.

HMRC’s standard letter to CASCs

A standard letter is being sent to all registered CASC’s. The letter is being sent out in 3 batches, the first of which was sent at the end of March. Mailing should be completed by the end of May. It is my understanding that all CASCs will receive this letter over the coming weeks.

The main points in the letter are:

1. A request to review CASC eligibility to stay registered within the scheme.
2. An outline of the conditions for eligibility.
3. Confirmation that no action is required if the eligibility conditions continue to be satisfied.
4. A request to contact HMRC if they are not to discuss the available options.
5. Potential penalties if the club no longer meets the qualifying conditions.

What action should my CASC club take?

Perhaps the natural reaction is to do nothing given the “red tape” club treasurers already must deal with. This would be unwise since HMRC is likely to carry out follow up enquires (albeit on a sample basis) to confirm clubs have carried out the review it has requested. 

In my view a CASC sailing club should:

a. Carry out a review of its compliance with the current CASC conditions as requested in the HMRC letter. This should be done on a timely basis (although for those clubs which have received the March letter it would have been difficult to meet the 29 April deadline specified by HMRC).

b. Document the results of the review and get sign off from the club’s Directors/Management duly discussed and minuted at a Board / Management Committee meeting. Assuming the conditions are still met this will provide evidence to HMRC (it may be requested subsequently) that the club remains CASC compliant and has followed HMRC’s request.

c. If the conditions are not met (bearing in mind there may have been changes since 2015 when new CASC conditions were introduced) consider putting matters right before approaching HMRC. If possible, this is likely to put clubs in a much better position before any approach is made.

How should my club  conduct the review

HMRC’s Detailed Guidance Notes (DGN’s) which outline the conditions to be satisfied run to 42 pages. The conditions cover not only the original conditions when the CASC scheme was introduced in 2002, but those when the scheme conditions were significantly expanded in 2015. The DGN’s can be difficult to follow so taking steps i) to iii) below should be helpful:

Appropriate wording of the club’s Constitution or Articles of Association has been required since 2002. This is a good starting place for the review since these documents may have changed over the years without realising clauses have become non-CASC compliant. HMRC’s model clauses for Constitutions / Articles can be found in its Guidance Annex 5 and should be checked as a first step

i) Other major conditions are that the club must have open membership with no  discrimination, and it must be managed by “fit and proper persons”. Again, compliance with these conditions should be confirmed with reference to HMRC’s DGN’s above.

ii) In practice most of the difficulties with the CASC conditions have been with the 2015 changes. A useful check list to follow with links in to HMRC’s DGN’s can be found on the CASC website.

Next steps

All CASC registered sailing clubs should confirm compliance with the conditions now by:

a. Reviewing their Constitutions /Articles to ensure they have the appropriate CASC compliant wording.

b. Consider whether the major conditions of open membership and fit and proper persons are met.

c. Using the check list of the 2015 changes in CASC conditions to ensure they comply.

Having actioned the above, a CASC will be able to document its work, put matters right if necessary and approach HMRC, if appropriate, taking professional advice where necessary.

We have established a helpline to answer queries which can be accessed by emailing the RYA Legal team.

Richard Baldwin, MBE; FCA; CTA, Corporation Tax Specialist

Further help and advice

As part of the RYA affiliated club package, clubs can access a 30-minute consultation underwritten by the RYA, with an external tax consultant. Any additional services provided will be charged with a RYA discounted price.

Find out how your club could benefit from extra legal and financial assistance by visiting the Specialist assistance for RYA Affiliated Clubs page.