Hi,
Client has asked me about the incorporation of the boat club he is member of, the reason for doing so is that they have a lease/license with the Waterways authorities and the 2 members names on the agreement are no longer members. The authority have asked the club to incorporate and that entities name will go on the update agreement. I suspect they are pushing this as it will potentially be easier for them to administer i.e. not subject to members joining and leaving.
So based on the club incorporating who becomes the shareholders? My thoughts are:
1. Not the existing club as it isn't a legal entity
2. All the members, currently about 20. Challenge with this will be maintaining the share register as members come & go
3. Core members only, if they exist
Assets are minimal, 4kva generator and wooden jetty on the side of the river total value say £300
Corp tax - As it will be club [not for profit] would apply for dispensation not to file CT rtns
Any suggestions other than don't get involved?
Mark
Replies (16)
Please login or register to join the discussion.
assuming its a not for profit club, might be worth going for community amateur sports club status as this will bring a whole host of additional benefits
No No
You need a company ltd by guarantee - no shares only members
If it could qualify for CASC then go for full charitable status - no point in being a CASC
Consider new CIO format if could be charitable.
Consider vesting lease in separate entity.
If above is gobbledegook then PM me or post again
No point in being CASC???
cant see why a sports club would want charitable status over CASC?
the benefits of CASC far outweigh the other options
potential for 100% rate relief not just 80%.
easier reporting
preferential treatment for grants from sporting bodies if casc
also its a boat club presumably run for the benefit of its members, unlikely thats its aims are charitable
Sounds to me...
... like you know plenty about CASCs but not enough about charities. I'll let Chris Smail come back and explain though, since it's his specialty.
If it has a youth scheme
it may qualify as charitable as an educational facility. No expert though!
Well...
... as Chris has indicated, if it qualifies as a CASC, it will also qualify as a charity. The furtherance of sport is a charitable purpose, and if there are no barriers to membership (also a CASC requirement) then it will satisfy the public benefit test.
Charities (just like CASCs) are entitled to both 80% mandatory NDRR, as well as the additional 20% discretionary NDRR (available to any non-profit making body).
The direct tax exemptions are wider for a charity than they are for a CASC, and there are additional VAT advantages for a charity.
I doubt that there is any preference given to CASCs over a charitable club for grants, but I'm sure Chris can put us straight.
So you're down to reporting, and a charitable club will, quite likely, be exempt from filing anything with the Charities Commission or OSCR. Again, I imagine Chis can put us straight.
WTF?
Why not keep it as it is and appoint two Trustees to handle the lease?
(CASCs and Assets don't mix!)
To answer your question....
The problem you have with outgoing property trustees is a common one in the club sector. The legal of costs of changing trustees often put off clubs from dealing with these issues as they arise but these need to be balanced against the ongoing costs of company compliance.
Instead of going with a normal company with shares - why not go with a company limited by guarantee? Then you won't need to maintain a share register, deal with transfers of shares etc when members come and go. You would need to maintain a company register of members but this would match the club membership register so should be easy to accomplish.
Each member would need to contribute, say a £1, as their guarantee but this can be taken from the next years subs/mooring fees.
By the sounds of what you have written, it’s unlikely the club would qualify for charitable status so CIO is out of the question. You could consider CIC but these are even more cumbersome than the other options!
With regard to CASC, why wouldn’t you want to use this? The government are consulting on relaxing the rules surrounding these and some of the other posts have highlighted some of the benefits. So long as membership of the club is unrestricted HMRC should approve an application and this would secure the mutual trading exemption for CT as well as allowing the club to avoid tax on interest earned or any rental income from non-members. The other benefits are the ability to receive legacies tax free and claim Gift Aid on donations.
CASC status is well recognised in the not-for-profit sector although it may not be elsewhere and from personal experience as a treasurer of a sports club was the best thing we have done in recent years. It certainly assists with accessing grants, financial products tailored for the charitable sector usually at lower cost (even though we aren’t charitable) and other sources of income from the likes of Everyclick/Charities Trust etc.
OK I'm back - had the bug.
We understand that this is a club of boat owners, not in any sense an 'amateur sport', so you need a Company Limited by Guarantee (or perhaps an IPS, but probably not) to hold the lease, with either a few trustees as members who admit their own replacements or membership open to all users and directors appointed as normal. This should qualify as mutual trading provided you are sensible.
NB a guarantee is a guarantee, nothing is paid in unless the company goes bump
If it can fit into one of the ‘heads of charity’ , perhaps as a canoeing or competitive sailing club maybe, see here, then it may be worthwhile going for a CIO or registering the company as a charity, but it would seem from your description that it does not.
I repeat I see no reason nowadays to be a CASC, in all cases you could be a charity with no restrictions on income or on gifts from companies. I suppose if you are not happy preparing charitable company accounts it would be daunting, but they are not that difficult surely.
Chris Smail
A CASC is just a political fiction
All of the restraints of being a charity in exchange for some of the benefits.
If you want to protect the assets from the follies of the members form two ClGs, one to hold the asset and one to act as a club. But if there is no club as such and you just need a vehicle to hold the asset then by a CLG off the shelf - I use this lot - and novate the lease.
If the existing lease has or can be ended and a new one is being negotiated then presumably there will be no transfer of value BUT do think this through.
If there is a transfer of value then, if you can register the CLG as a charity, perhaps as a recreational charity see section 5, you can gift into it tax free. If not you should get clearance from HMRC first to prevent unpleasant surprises. If the club has no existing CT registration try phoning Clubs & Charities at Bootle 0845 3020203 and talking it over with them.
Chris Smail
Disingenuous
I think Chris' comments about CASC are a little disingenuous. There is huge overlap between sports club charities and CASC but the two have to be weighed on balance. CASC gives you great benefits, with certain restrictions and no regulation by HMRC except on creation. Charity status gives you additional benefits, such as VAT exemptions, some restrictions on things like subscriptions and member benefits and additional regulation from the CC along with higher expected standards of governance. Both are great if used appropriately and that is the key.