Your club could be at risk if it does not meet its tax obligations. A good place to start is by identifying the different forms of tax that may be relevant to your club. You can then investigate these areas further and seek professional guidance on what is applicable to your club as required.
The most common forms of taxation that a club would be affected by are:
If your club trades and makes a profit then those profits could be taxable and subject to corporation tax. You will need to file a corporation tax return and tax computation and pay corporation tax within 9 months of your financial year end. A tax computation is a calculation that works out how much tax is owed, after adjusting for taxable and non-taxable items of income and expenditure.
Where a club is not seeking to make a profit and any surplus made is used for the benefit of its members, this is generally exempt from tax under the 'Mutual trading' concept.
For more information on Corporation Tax, visit the Government Website.
Value Added Tax (VAT)
VAT can be a complex area, and simply registering your club for VAT does not mean your club will be able to reclaim all of the VAT on its purchases.
It is essential therefore that you are aware of the key VAT issues that are relevant to your club in order to get your VAT reporting right, maximise the amount of VAT that can be reclaimed; and to avoid costly penalties and interest charges. Remember, deliberate avoidance of payment of VAT, or reclaiming too much VAT is fraud - a criminal offence which could result in prosecution, a fine or a custodial sentence.
Introductory guidance for businesses and charging VAT can be obtained by visiting the Government Website. If in doubt, seek professional guidance.
PAYE income tax and national insurance
As well as PAYE and National Insurance taxes collected via your payroll, your club may also be liable for these taxes if it provides taxable benefits-in-kind to its employees. Examples of benefits-in-kind can be providing an employee with the use of a car or van or paying for health insurance.
Capital Gains Tax
If your club owns assets like land or buildings, then it could become liable for Capital Gains Tax on any profits it makes.
Community Amateur Sports Club - Tax Relief
Clubs can apply to be registered with HMRC to claim tax relief. This tax relief is available to all clubs in the country and ensures that community sport is given the best possible chance to nurture and enhance sport locally.
The Community Amateur Sports Club (CASC) scheme can offer financial benefits to clubs including a reduction in business rate charges, tax relief on income, gains and profits, and can allow clubs to generate income through Gift Aid.
We’ve also got more information about CASC and other types of club structures here.