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HMRC Mailshot Gift Aid

HMRC has recently written a letter to sports clubs who have claimed Gift Aid (see below). The intention of the letter is to clarify the position in respect to charities / community amateur sports clubs (CASCs) claiming Gift Aid on membership subscriptions.

CASCs:

Essentially CASCs are unable to claim Gift Aid on membership subscriptions as, in return for the membership payment, individuals benefit from the personal use of facilities/services and as such the payment cannot be treated as a gift.

Charities:

In the majority of cases membership subscriptions for a sporting charity are unlikely to be gifts because, as above with CASCs, individuals get personal use of facilities or services in return for their subscription. However, where the payment of a membership subscription does no more than entitle the individual to vote and attend the charity’s AGM, Gift Aid may be claimed on the payment. HMRC provides the following example: a sports charity may charge a basic membership subscription that means members then have to pay additional charges for playing or training that are on similar terms to non-members. The extra training or playing charges could not be treated as gifts [but in the example provided, the basic membership subscription would be eligible for Gift Aid].

If you are currently claiming Gift Aid on your member subscriptions or indeed you are thinking of doing so you will need to very carefully consider whether your proposal falls within HMRC’s interpretation of gift. It is vital to seek written confirmation from HMRC that your proposal meets with the Gift Aid requirements.

HMRC’s Gift Aid Letter

Charity reference:

Why we are writing to you

Our records show you have previously claimed Gift Aid and are either a Sporting Charity or a Community Amateur Sports Club (CASC). If this is not the case, then please ignore
this letter.

We are aware that some Sporting Charities and CASCs have incorrectly claimed Gift Aid for membership subscriptions. Although you may not be one of these, this letter is to help you understand when Gift Aid on memberships can be claimed.

Please note, a charity or CASC can only claim Gift Aid on a gift received from an individual who has completed a Gift Aid declaration. Without the completed declaration, a donation from an individual will not qualify for Gift Aid.

CASCs

CASCs cannot claim Gift Aid on membership payments. This is because a membership payment is not a gift. To find more information about Gift Aid please, go to www.gov.uk/hmrc/casc-guidance

Sporting Charities

Most membership subscriptions are not gifts. This is because individuals pay them to get personal use of facilities or services provided by the charity. This means that Gift Aid cannot be claimed. For example, subscriptions that an individual pays to get tuition, coaching or other educational instruction are not gifts. In the same way, subscriptions are not gifts if they give members free or discounted use of facilities or services. Such as use of a golf course or a swimming pool that would not be available on similar terms to non-members.

Gift Aid for Sporting Charities can be claimed on membership subscriptions that only give an individual the right to vote, the right to attend the charity’s AGM and are used for other basic administrative costs. For example, a sports charity may charge a basic membership subscription that means members then have to pay additional charges for playing or training that are on similar terms to non-members. The extra training or playing charges could not be treated as gifts.

A charity that charges a standard membership subscription that covers both membership and use of services or facilities cannot claim any of that subscription as a gift. If you wish to understand more about Gift Aid and membership subscriptions, go to www.gov.uk/government/publications/charities-detailed-guidance-notes/chapter-3-gift-aid

Example - Sporting Charity

Riverpool Swimming Charitable Trust receives £500 annually from each member. This payment allows the member to use its swimming pool and have regular tuition. Non-members are not allowed to use the pool or get tuition. As the membership gives personal access to the facilities and to get tuition, then Gift Aid cannot be claimed.

Example - Sporting Charity

Teddy Bear Football Charitable Trust receives £20 annually from each member. The membership only gives each member voting rights at the Trust’s Annual General Meeting, as well as covering basic administrative costs. Members also need to pay £5 each week for training and match fees. The charity can claim Gift Aid for the £20 membership but not the £5 paid each week. This is because the £5 is used to pay for using the sporting charity’s facilities when playing and training.

What to do now

Please consider this information before you make your next Gift Aid claim. To make a claim for Gift Aid, go to www.gov.uk/claim-gift-aid-online

Business Rates:

A number of RYA affiliated clubs have been contacted by HMRC requesting that they complete a receipt and expenditure rate setting form VO6036, no doubt in preparation for the next rate revaluation in 2021.

However, the use of this form is unusual and, on the face of it, incorrect as a receipt and expenditure valuation is not considered to be appropriate for the not-for-profit sector. We have been in discussion with the VOA which has confirmed that a policy decision was made to ask clubs to complete the receipt and expenditure form, at the same time it acknowledged that the use of this form may be inappropriate in certain circumstances. 

We have invited the VOA to agree in writing that, where the form is inappropriate, a club need only provide ownership/rental data. We are awaiting its response and will update readers via Club Room in due course. In the meantime if you receive the receipt and expenditure rate setting form VO6036 please do contact us.

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