Section 46, Schedule 21: Community Amateur Sports Clubs
Summary
1.Section 46 introduces Schedule 21 which makes provision to amend the conditions a club must meet in order to be a registered Community Amateur Sports Club (CASC) under Chapter 9 of Part 13 of the Corporation Tax Act (CTA) 2010.
Details of the Schedule
2.Paragraph 2 of the Schedule amends the meaning of ‘open to the whole community’ under section 658(1A)(a) by amending section 659 of CTA 2010.
3.Sub-paragraph (2) of paragraph 2 replaces sub-paragraph (c) of section 659(1). The new subsection provides that the costs that need to be taken into account when considering whether a club is open to the whole community include the costs for membership, use of facilities and the costs of full participation in the activities of the club.
4.Sub-paragraph (3) of paragraph 2 inserts new subsections (2A), (2B), (2C) and (2D) into section 659.
5.New subsection (2A) specifies, for the purposes of new paragraph (c) of subsection 659(1), when the costs associated with membership of a club for any year represent a significant obstacle to membership of a club, use of its facilities or full participation in its activities.
6.The club will not be open to the whole community if those costs exceed an amount, to be specified by the Treasury in regulations, unless the club has made arrangements to ensure those costs are not a significant obstacle.
7.New subsections (2B) and (2C) provide that the Treasury may make regulations supplementing new subsection (2A).
8.New subsection (2D) disapplies the requirement in section 1171(4) of CTA 2010 that regulations and orders are made subject to the negative resolution procedure. The requirement is disapplied where the regulations are contained in an instrument which is subject to the draft affirmative resolution procedure.
9.Sub-paragraph (4) of paragraph 2 replaces subsection (3) of section 659 with new subsection (3), which specifies that a club may charge different fees for different forms of membership of the club and still be regarded as being open to the whole community. For example a club could offer a special class of membership at a reduced cost to people on a low income.
10.Paragraph 3 of the Schedule amends the meaning of ‘organised on an amateur basis’ in section 658(1A)(b) by amending section 660 of CTA 2010.
11.Sub-paragraph (2) of paragraph 3 inserts new sub-paragraph (ba) in section 660(1). It permits a club to pay players, subject to certain conditions, while still meeting the requirement to be organised on an amateur basis.
12.Sub-paragraph (3) of paragraph 3 amends section 660(4)(g) to specify that a club may pay players and officials the costs of subsistence as well as the costs of travel when a club team attends away matches.
13.Sub-paragraph (4) of paragraph 3 inserts new subsection (4A) into section 660, to define the meaning of the new term ‘subsistence expenses’ in amended section 660(4)(g).
14.Sub-paragraph (5) of paragraph 3 inserts new subsections (5A) and (5B) into section 660. New subsection (5A) provides conditions that may apply to the payment of players. The detail of these conditions will be specified in regulations made by the Treasury.
15.New subsection (5B) allows the Treasury to make regulations to supplement the conditions in (5A), in particular to provide when a person is or is not to be regarded as being paid to play, and to specify how the amounts paid to a player are to be calculated.
16.Sub-paragraphs (6) and (7) of paragraph 3 insert new subsections (8) to (13) into section 660. The new subsections allow the Treasury to make further regulations as to when a club is ‘organised on an amateur basis’, including provision about the ‘ordinary benefits of an amateur sports club’, and about who is to be regarded as a guest of a member for the purposes of section 660(1). The regulations may amend any provision of Chapter 9 of Part 13 of CTA 2010 and, if they do so, are subject to the draft affirmative resolution procedure.
17.New subsection (13) disapplies the requirement in section 1171(4) of CTA 2010 that regulations and orders are made subject to the negative resolution procedure. The requirement is disapplied where the regulations are contained in an instrument which is subject to the draft affirmative resolution procedure.
18.Paragraphs 4 and 5 of the Schedule introduce a new requirement that a club must meet in order to be considered to meet the ‘main purpose’ test in section 658(1A)(c).
19.Paragraph 5 inserts new section 660A into CTA 2010. New section 660A prevents a club from meeting the ‘main purpose’ test if the number of its members that do not participate in the club’s sporting activities exceeds a certain percentage of all the members of the club. This percentage will be specified in regulations made by the Treasury.
20.The Treasury may also make regulations in new section 660A defining when members of the club are to be regarded as participating, or participating occasionally, in the sporting activities of the club, and which activities are to be regarded as ‘sporting’.
21.New section 660A(5) disapplies the requirement in section 1171(4) of CTA 2010 that regulations and orders are made subject to the negative resolution procedure. The requirement is disapplied where the regulations are contained in an instrument which is subject to the draft affirmative resolution procedure.
22.Paragraphs 6 and 7 of the Schedule allow the Treasury to change the thresholds for the exemptions from corporation tax on trading income and income from property in sections 662 and 663 CTA 2010. If a threshold is reduced then draft regulations must made under the draft affirmative resolution procedure.
23.Paragraph 8 of the Schedule provides that the Treasury may specify a new ‘income condition’ which a club must meet in order to be a registered club. The new condition may restrict or prohibit the receipt of different types of the income, including income of a specified description which could include, for example, income from non members. The regulations may amend any provision of Chapter 9 of Part 13 of CTA 2010 and, if they do so, are subject to the draft affirmative resolution procedure.
24.Paragraph 9 of the Schedule provides in subparagraph (1) that any powers conferred on the Treasury come into force on the day on which the Act is passed. Subsections (2) and (3) provide for the remaining amendments to be brought into force by a commencement order made by the Treasury.
25.Paragraph 10 of the Schedule provides that where provisions have retrospective effect, those provisions cannot be used to cancel the registration of a club from a date before the passing of this Act. The exception to this rule is where the club had provided HM Revenue & Customs (HMRC) with inaccurate information about its eligibility and the inaccuracy was deliberate or careless within the meaning of paragraph 3 of Schedule 24 to the Finance Act 2007.
Background
26.A sports club may be registered by HMRC as a Community Amateur Sports Club (CASC) provided it meets certain conditions. CASCs benefit from a number of tax reliefs, including an exemption from tax on certain income and gains (provided the club uses the income and gains for qualifying purposes), Gift Aid, and non-domestic rates relief.
27.The main eligibility conditions a club must meet in order to be registered are that it must:
be open to the whole community
be organised on an amateur basis and
have as its main purpose the provision of facilities for, and the promotion of participation in, one or more eligible sports.
28.HMRC has carried out a review of the eligibility conditions contained in Chapter 9 of Part 13 of the Corporation Tax Act 2010 and concluded that the current legislation is unclear. The Schedule amends and clarifies the conditions for eligibility to the CASC scheme, and gives a number of powers to the Treasury to provide the detail of these conditions in regulations.
29.HMRC will publish a consultation document in spring 2013 setting out the Government’s proposals for the detail of those conditions.
30.Draft regulations will be published later in 2013, after the public consultation. To the extent that they amend primary legislation the draft regulations must be approved by the House of Commons before they can be made by the Treasury.
31.The amendments and the regulations may have retrospective effect. Retrospection is needed to enable HMRC to register a number of clubs whose applications have been on hold pending the outcome of its review of the legislation.
