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Structure

There are a number of reasons to get your Club structure correct:

  • It determines whether your Club is a separate legal entity or not.
  • It has an impact on members' liability.
  • There are different rules and legal requirements depending on how your Club is structured.
  • It can have financial implications.
  • It can influence how your Club is viewed by others E.G Banks, funding providers, the public.

The legal structure of your Club is how it is constituted in the eyes of the law. Clubs will take different legal forms depending on their structure and size, along with decision taken historically.

  • Incorporated by Guarantee
  • Unincorporated
  • Registered Society
  • Registered Charity
  • Incorporated Charity

Unincorporated

Advantages include simple administration. Unincorporated (unless also a charity) do not have the same legal and administrative requirements that companies have (e.g., the requirement to file accounts or an annual return). Flexible. The rules of an unincorporated association can be whatever they choose, provided they are lawful and can be easily updated. Remember that the rules the RFL, or the requirements for grant funding may need your constitution to contain certain clauses. Disadvantages include there being no separate legal identity. An unincorporated association is not separated from its members in the eyes of the law. This means that committee members or trustees will have to enter into contracts, or hold assets, on behalf of the Club rather than the Club itself. In the event of a claim against the Club or breach of contract, members of the committee or trustees, or wider Club could be personally liable. Transfer of assets. As assets are held by individuals on behalf of the Club, rather than the Club itself, they must be transferred if that person leaves the Club.

Incorporated Associations

Like an unincorporated association, a Club set up as a company limited by guarantee will be owned by its members. The main difference is that the Club will have a separate legal identity allowing it to enter into contracts in its own right and it therefore offers protection for Club members. This structure is well suited to Clubs operating on a non-profit making basis where membership changes regularly. Members agree to pay a minimal amount if the Club becomes insolvent, limiting their liability. Advantages include separate Legal Entity. This allows the Club to enter into contracts and hold assets or investments in its own name. Limited Liability. Members are protected and only required to pay an agreed sum (typically £1) if the Club becomes insolvent. Having limited liability will protect the directors (of the company) and members against a claim, provided the directors have been compliant with company law requirements. Disadvantages include additional administrative work needed to comply with legal requirements. These include filing annual accounts, annual returns and providing directors’ information to Companies House. There are fines for missing deadlines - including filing annual accounts, annual returns and providing directors’ information to Companies House (public authority responsible for managing a register of all companies across the UK). Companies House has more information on starting a company and the ongoing requirements. Directors must also ensure they and the Club adhere to the governance obligations set out in the Companies Act (2006).

Charitable Status

Adopting charitable status may benefit your Club, but it also brings with it additional requirements. You will need to meet certain rules to be eligible to become a charity and meet ongoing annual reporting requirements. Most Clubs including those set up as unincorporated associations companies limited by guarantee and community benefit societies can be charities. A Community Interest Company (CIC) and non-charitable community benefit societies cannot be a charity but exist to benefit the wider community by trading to make a profit. As the name suggests, a Charitable Incorporated Club (CIO) must be a charity.

The Community Amateur Sports Club (CASC)

The Community Amateur Sports Club (CASC) scheme provides a number of charity-type tax reliefs to support local sports Clubs. The CASC scheme can offer important financial benefits to Clubs including significantly reducing business rates charges and allowing Clubs to generate additional income through Gift Aid. On 1 April 2015, significant changes were introduced to the CASC scheme. The Government introduced the new rules to encourage more Clubs to sign up to the CASC scheme enabling them to generate more tax-free income and to make the rules easier to understand for existing CASCs.

Charitable Status

Advantages

  • Tax Reliefs - Charities attract considerable tax advantages on charitable expenditure including trading profits, rental income, on profits if you sell an asset and when you buy property. A Club will also benefit from 80% relief from Business Rates.
  • Fundraising - People may view you differently as a charity. Charities often enjoy considerable support from funders and other potential supporters and can claim Gift Aid on donations. In addition, charities can run certain fundraising activities that may be banned or require a license for non-charities.

Disadvantages 

  • Status - Once registered as a charity a Club cannot stop being a charity.
  • Administration - Regulation by the Charity Commission can involve an additional administrative burden. 

The Community Amateur Sports Club (CASC)

Benefits

  • Mandatory 80% relief from business rates
  • The ability to generate income through the gift aid scheme
  • Exemptions from corporation tax

CASC Clubs need to meet certain conditions:

  • Being open to the whole community
  • Setting limits on the costs for members
  • Being organised on an amateur basis
  • Requirements on participation and income generation

HMRC have detailed guidance notes available to help guide you through the process of CASC.

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