In 2002 Community Amateur Sports Clubs (CASC) were introduced to give certain sports clubs the benefit of tax status similar to a charity. The membership of Mapperley voted in favour of the club being a CASC at an extraordinary general meeting in 2005. The major benefit is an 80% rate-relief, currently saving us in the region of £20000 per year (about £40 per member).
In 2015 HMRC changed some the rules of CASC status partly due to a VAT ruling in favour of golf clubs and pressure being applied by proprietary clubs (where the business is run for the financial benefit of an owner or shareholders). Such clubs do not qualify for CASC status and claimed that tax concessions gave CASC clubs a competitive advantage.
Rule changes included that membership should be affordable to those on low incomes. To comply with these requirements we introduced a part-week membership for those on low incomes.
Earlier this year we completed new documentation required by HMRC, but they decided we had failed to meet the compliance requirements. We have appealed this decision but are working towards meeting their requirements in order to re-establish our CASC status (maintaining the rate-relief and tax benefits that goes with it).
Further rule changes introduced a trading income limit. CASC status is removed where annual turnover exceeds £100,000. Trading income includes items such as Green Fees; non-member buggy hire; bar takings from non-members; and income from rent, advertising and sponsorship. Surprisingly, social members are classed as non-members.
Increases in income from catering, bar services, rent and visitor fees (partly due to VAT changes) mean that Mapperley has traded very close to this turnover limit for the last two financial years.
However, CASC rules permit that if a club is likely to exceed the turnover limit they may set up a trading company. All non-member income can then be put through the trading company, and appropriate costs apportioned to the trading company. Any ‘trading profit’ is then donated to the CASC-registered club as a gift-aid, tax-exempt donation.
The trading company makes no profit and so has no tax liability. The gift-aid donation becomes part of the (CASC-registered) Club’s turnover which is then at a level likely to fall within a lower taxation band. This in turn minimises any Club liability for Corporation Tax.
The Board therefore agreed, in July this year, to set up a trading company. With our accountants’ help this was successfully completed on the 27th August 2016. The new company (Mapperley Golf Club Trading Limited; Registration number 10350209) is limited by guarantee: a not-for-profit company with no shareholders. Please be assured that Mapperley Golf Club and Mapperley Golf Club Limited still exists – with our members as ‘shareholders’.
The Board will formally agree the transfer of assets - essentially bar stocks - and grant permission for the trading company to share Mapperley Golf Club facilities. We also need to take some other administrative steps such as VAT registration, informing suppliers etc. Although we may incur some additional expense in year one of the trading company, the benefits will far outweigh these and any additional administrative burden.
This is a fairly difficult subject and I have tried to make it as straightforward as possible. However, if anyone requires further information please do not hesitate to contact me or a fellow director.