INCORPORATION PROTECT THE PEOPLE RUNNING YOUR CLUB Dave Stubley RFU Funding and Facilities Manager

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INCORPORATION - PROTECT THE PEOPLE RUNNING
YOUR CLUBDave Stubley RFU Funding and
Facilities Manager
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Is your rugby club a risky business?

• Do you know how your club is constituted/legal
  status of your club?
• What does that mean to you and your fellow
  committee members or trustees if a legal claim
  was brought against the club?
• The RFU strongly recommends that club/CB should
  be incorporated to protect its most valuable
  asset you, the army of volunteer club
  administrators

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Incorporation of Rugby Football Clubs

• Constitutions used by Rugby Clubs currently
• Unincorporated Members Clubs
• Limited Company (by guarantee or shares)
• Industrial and Provident (IPS)
• Guidance not just aimed at Clubs but CBs as well

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Incorporation why incorporate?

• An unincorporated club has no legal identity of
  its own
• As a result if it employs people or undertakes
  activities (eg organising matches), individuals
  (usually the Committee) will have to act on its
  behalf
• If club holds property, it will have to appoint
  trustees to do so
• If claims are brought they would be against
  Committee members personally, who would be
  personally liable if the Clubs assets do not
  exceed the liability
• Rugby is a contact sport and although personal
  injury on the pitch is rare it does happen and
  accidents of any kind can occur in any rugby
  environment and claims against clubs are a real
  possibility

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Incorporation why?

• Dont just imagine that insurance will cover
  you for all eventualities.
• Incorporation is the first line of defence,
  insurance is the second

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Why incorporate live example

• Weymouth RFC
• Pursued by woman who claimed she damaged her arm
  while using the bridge over the culvert.
• Settled out of court
• Money raised by members and brewery loan to meet
  the claim
• Committee members were jointly and severally
  liable for any claim
• If it had been a large claim then even
  house/savings could have been at risk.
• Club is now IPS and CASC registered

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Incorporation what form should the club take?

• Two options for non profit making clubs
• Company Limited by Guarantee
• Industrial and Provident Society
• In either case the Rugby club will have a legal
  personality of its own and as such can enter
  contracts, hold property, sue and be sued in its
  own name.

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Are there disadvantages?

• Companies and IPS are regulated by Companies
  House and the Financial Services Authority (FSA)
  respectively
• The constitution and accounts will need to be
  lodged each year but these have to be filed
  with the CB anyway
• The advantages outweigh the disadvantages

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How does a club incorporate?

• Incorporation involves establishing the new
  company and then transferring the assets and
  undertaking of the club to it.
• Appoint a steering group and decide the timescale
• Tell your members that it is planned

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Incorporation steps

• Prepare the Memorandum and Articles using the
  relevant RFU template/ model rules
• Look at CASC compliance at same time
• Apply for clearance from HMRC for the
  incorporation
• Prepare the resolution of the members to transfer
  the assets and undertaking to the new company.
• Call and hold general meeting in accordance with
  your rules

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Incorporation key points

• Information and model rules on www.rfu.com/communi
  ty under Club Management section, however
• Clubs need to take there own legal advice
• Link it in most cases to CASC registration
• CD Rom and newsletter distributed to the game

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COMMUNITY AMATEUR SPORTS CLUB (CASC)Save money
for your Rugby Club!!
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Barnsley RUFC an example

• CASC registered April 2004
• To date saved 32,000 in relief from business
  rates
• CASC status hasnt changed anything we do at the
  club. Its just made running the club that bit
  easier financially

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Ilkey RFC an example

• 2000 per year saving from Business Rate Relief
• Over 2 years received 7,900 in gift aid refunds
  on 2 donations
• Have found that trusts that only give to
  charities have extended this to registered CASCs
• the most important benefit has been ability to
  claim tax paid at basic rate on all donations
  under Gift aid. The process is simple . I cant
  understand why all amateur sports clubs have not
  registered

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CASC National Picture

• 4,882 sports clubs are now registered with an
  estimated 43.6m worth of savings (Deloitte)
• 320 rugby clubs are now registered with an
  estimated saving of 4,000 per club
• 1 rugby club has saved capital gains tax on
  ground sale of 6.5m by being CASC registered

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CASC - Background

• 2001 campaign for tax benefits for sports clubs
  provide HMT with 2 amendments
• Sports clubs could register as charities
• Sports clubs could register as CASC
• Schedule 18 of Finance Act 2002 established CASC
• 2003 Local Government Act registered CASCs to
  claim 80 mandatory rate relief
• 2004 threshold exemption for corporation tax
  raised

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CASC The Benefits

• 80 mandatory business rate relief
• Gift aid on individual donations (28p in the
  currently)
• Corporation Tax exemption on profits derived from
  trading activities if trading income is under
  30k PA

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CASC The Benefits

• Corporation Tax exemption on profits derived from
  property income if gross property income is under
  20k PA
• Tax free income from interest and capital gains
  (used for qualifying purposes)
• Avoidance of Capital Gains on sale of land

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CASC - Criteria

• Decision should not be taken lightly
• Financial advantages for many
• For some not the best option
• Link the decision making process to incorporation
  discussion
• RFU model rules for IPS and Ltd by Guarantee
  offer CASC compliant rules that have been agreed
  with HMT and HMRC

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CASC - Eligibility

• Open membership
• Club must be open to whole community without
  discrimination
• Fees must be affordable
• Club must be Amateur
• Be non profit making and reinvest any profits
  back in the club
• Can only provide ordinary benefits of
  membership
• Constitution must require assets on dissolution
  be applied for similar purposes
• Purpose of club to provide facilities for rugby

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CASC - Issues

• Club constitution / model rules
• Once a CASC always a CASC
• Deregistration provisions can trigger Capital
  Gains Tax liability
• This specifically safe guards against future
  distribution of profit to members
• But also takes into account clubs that may no
  longer be adhering to CASC principles

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How to become a CASC

• Straightforward
• Read and discuss the guidance notes from HMRC and
  decide if CASC registration is right for your
  club
• Look at clubs constitution does it fulfil
  criteria set out in the guidance notes make use
  of RFU model rules
• If you are happy that CASC registration is right
  and that the constitution is right complete and
  submit the HMRC application form

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CASC for information

• Be aware of Subs for Clubs campaign
• Be aware of Discretionary rate relief
• CASC benefits for clubs that pay players
• Gift Aid
• Top rate tax payer
• Volunteer expenses
• Vice Presidents/ Social members
• Auctions
• Legacies
• Sponsored events

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CASC where to go for further information

• www.cascinfo.co.uk
• Download all the key forms and guidance booklets
• Learn how to maximise Gift Aid
• Access CASC Q As
• Keep track of news of the scheme
• Register for regular updates
• Talk to other clubs via online forum

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CASC where to go for further information

• www.rfu.com/community
• club management section
• RFU sample rules for Industrial and Provident
  Society qualifying as CASCs
• RFU sample Memorandum Articles of Association
  for Rugby Clubs constituted as a company limited
  by guarantee qualifying as CASCs