Sport is fun. Sharing sport with friends is even more fun. Doing it in a club adds structure and purpose. But clubs don’t run themselves. Someone has to take responsibility and put in the time to make things run smoothly, to protect the clubs assets and watch over everyone’s interests.  Running a club can be burdensome and risky.

 

The Tommy Clay Athletics Track in Boston, Lincolnshire honours the memory of a dedicated former schoolmaster who ran Holbeach Athletics Club for many years. He did not die young, but his life was probably shortened by the loss of one leg; and that amputation was an indirect result of his dedication to the club. On a particularly cold winter’s day the club bus broke down. The younger members shivered and complained; Tommy’s age put him at higher risk as they sat for two hours waiting for help. The cold provoked a blood clot and the leg was amputated to save his life.

Tommy Clay was typical of dedicated club leaders in thousands of communities. We admire and honour them and sometimes give them national recognition through the “honours system”. But how many club members really appreciate the risks their leaders are taking?

The risks that most clubs face have nothing to do with health or mortality, but come down to financial liability and the problems of balancing the books. Sports clubs provide invaluable service to the community, mostly on a not-for-profit basis; but they are exposed to risk as much as any profit-making business. Clubs can be sued. Club earnings are subject to tax. Clubs can lose money. And, whatever the risk, the buck stops with the club leaders or officers.

David Cameron’s “Big Society” initiative recognised the huge benefits the community receives from volunteers; but there’s nothing new about that; and there is already a range of legal provisions to protect the people who provide and run those services. It’s as well that they are. Would it be fair if the very people who freely give their time for the work should carry the risks without protection?

Protection for sports clubs ranges from specialised insurance, through focussed tax provisions, to limited liability. Most clubs have recognised and acted on the insurance issues, probably using deals brokered by their respective sports association. But there is a sad lack of knowledge about the provisions made for sports clubs under tax and company law. The majority of local sports clubs fit the criteria to register with HMRC as Community Amateur Sports Clubs (CASC) and all sports clubs are allowed to register under the Companies Acts as limited liability companies in one or other of the formats the law allows. Under Company Law the directors of a company can lose their stake in the company but their private assets are safe. On the other hand, the proprietors of unregistered businesses (and all the members of clubs) can lose unlimited amounts if the organisation gets into difficulties.

The tax rules for Community Amateur Sports Clubs (CASC) are quite generous and allow advantages that can significantly improve the clubs financial position. A quick glance at the HMRC website shows how clubs can benefit from relief from corporation tax on earnings below £30,000. Not only that; they may qualify for Gift Aid, allowing them to receive contributions back from the tax man based on income tax paid by donors on the amount of money they give to the club. The rules and qualifications are necessarily complex, but we have summarised them on our CASC page on this website.
Converting the club into a limited liability company is a less complex option, because virtually everyone qualifies. The question is which type of company is best suited to your club’s needs? The answers depend mainly on scale; and some of the choices would rule out the CASC option mentioned above. For instance, a charity cannot be a CASC (because charities receive tax concessions under a different set of rules). But, for some sports clubs it may the best choice to register as a charity limited by guarantee. Some large clubs may see themselves going the way of the big football clubs, which almost all started as local amateur clubs. If your club is potentially into the big money league, you should forget about tax concessions and recognise that you are a business and form a regular limited company. However, the vast majority of local sports clubs are genuinely amateur organisations for which community service is the primary motivation. For these, the most appropriate legal format is a Community Interest Company (CIC).

A Community Interest Company (CIC) is a special kind of private limited company that is specifically recognised as a not-for-profit social enterprise organisation. Because they have registered status as not-for-profit organisations and are subject to an official CIC Regulator they are acceptable to many funding bodies. And they generally meet the requirements of the CASC tax rules.

Running a Sports Club is a major contribution to the Community. Don’t allow your dedication to expose you to unnecessary risks.

“Limited Liability” allows directors of registered companies to take reasonable business risk knowing that there is a limit to how much they can lose. Without it, most ventures would never start.

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