In August 2019 we reported that HMRC had written to sports clubs who have been claiming Gift Aid. The intention of the letter was to clarify the position in respect to charities / community amateur sports clubs (CASCs) claiming Gift Aid on membership subscriptions.
Essentially HMRC’s interpretation of the law is that for the most part the membership subscriptions of a sporting charity are unlikely to be eligible for Gift Aid as individuals receive personal use of the club facilities/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.
Some of our charitable clubs rightly challenged HMRC’s interpretation, we therefore sought Counsel’s Opinion on the issue. Counsel’s Opinion supports our view of the law that membership subscriptions, which encompass associated benefits e.g. clubhouse/bar/showers/storage etc., are not eligible for Gift Aid.
The conclusion is that a standard membership subscription that covers both membership and the use of facilities cannot qualify for Gift Aid as there are benefits associated with the gift.
However, it is possible for clubs to split their standard annual membership subscriptions to cover the use of membership and facilities into two separate and distinct categories comprising an annual subscription and an annual facility fee, both of which must be paid. Even though there would be an obligation to make both payments and therefore there might be a risk that HMRC would say that in some way the (qualifying) payment which would otherwise benefit from Gift Aid is somehow linked to the supply back relating to the other payment there is a clear distinction between the two: one qualifying and one not. HMRC’s view seems to be that you look at the two “supplies” as being separate from each other even though one cannot be paid without the other. Crucially however, clubs would need to obtain written approval from HMRC.
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.
If you require any further information please email firstname.lastname@example.org
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