Cricket clubs stumped by HMRC scrutiny

HMRC denied it is targeting local sports clubs after a Hertfordshire cricket club was sent a tax bill of over £14,000.

Sawbridgeworth Cricket Club, a 151-year-old amateur team with an annual income of around £21,000, received the bill after the Revenue carried out an assessment in 2012.

Speaking to The Telegraph, club chairman Val Waring said he was “stunned” when the bill arrived and thought he would have to close the club.

However, after HMRC agreed a schedule of staged payments and waived penalties, the club was able to settle the bill with money raised from fund-raising events and an interest-free loan.

Community amateur sports clubs are exempt from corporation tax on profits of less than £30,00 a year, but employees such as bar staff are subject to PAYE.

An HMRC spokesperson said the department wasn’t targeting amateur clubs, but non-compliance with the PAYE regime.

“This kind of work is normal. HMRC works to ensure employers are correctly operating the payroll system, so that everyone pays the right amount of tax. We have worked with sports clubs to put things right if necessary,” the spokesman said.

A prominent South West cricket club spoke to AccountingWEB, and said they had also seen evidence of HMRC investigation -- and not just concerning PAYE. 

"We have had simultaneous HMRC teams looking at PAYE and VAT. We had a little guidance, after the event, on PAYE. Neither the England & Wales Cricket Board (ECB) or Sport England could offer VAT advice on capital projects," a spokesperson said. 

"I believe HMRC targeting local cricket and other sports clubs is fairly common." 

Baker Tilly tax partner Mike Down, who is currently dealing with three similar cases, disagreed. “They are [targeting them] and there are many evidences of it. There are a number of clubs who have been picked up by the Revenue and not only the case in the Telegraph,” he said.

“It’s not an issue that RTI has highlighted as it’s been going on a long time before that. Although there are two hurdles, including HMRC jumping in and judging the people at the clubs as employees. The second one deals with whether or not there should be penalties.

“While there may not be a concentrated campaign, there are a number of Revenue people looking at cricket clubs. All types of sports clubs are at risk, really,” he added.

The England and Wales Cricket Board (EWCB) is urging amateur clubs to seek advice and meet NIC payroll and PAYE deductions. The board issued guidance advising members to challenge HMRC calculations and use the results of the review to negotiate with HMRC.

AccountingWEB members also reported evidence of a crackdown in a recent Any Answers thread.

Zeofiles knew of a local cricket club that had “the knock on the door”.

“Nearly every premier league club in this area and many others have likewise had similar visits.

“After cricket, what sports will be next? Certainly, HMRC have started looking at some rugby clubs, but this is more to do with not taxing certain types of income (ground rentals to non-members for example) as opposed to PAYE compliance. However, you may suspect this is easy pickings for HMRC and it is only a matter of time till they widen the net,” Zeofiles said.

Mrme89 was less sympathetic. The local working men’s club had held an AGM to ask members for £3,000 to keep the club open, following numerous HMRC fines for non-compliance totalling £12,000. “The lack of compliance in these sorts of places is staggering,” they commented.

Clubs faced with this kind of HMRC attention should seeking an accountant’s advice, members advised.

“If they can't do the payroll within the club (and let's face it, not many would probably want to) then this can be outsourced to an accountant or specialist payroll bureau for relatively modest amounts,” said AccountingWEB member 0103953.