Sports clubs need to take guard against unexpected tax bills
Sports clubs need to ensure they understand whether those helping the club in day-to-day activities are classed as workers, employees or volunteers, according to Thursfields’ charity expert Jenny Smith.
Jenny who is head of charities at Thursfields, said this was just one of the issues facing local sports clubs. The firm has been running seminars in the Midlands to raise awareness of the need to take professional advice. Topics covered included a suitable legal structure, incorporation, personal liability and should land and premises be on the Land Registry.
On employment, Jenny said clubs must be aware of what rights their employees had, whether they were employed, a worker or a volunteer. Issues such as the impact of the National Living Wage, for those 25 and over, and the National Minimum Wage for those under 25 must be clearly understood, she said. “Amateur sports clubs who don’t understand their obligations on pay could be wiped out by a single visit from HMRC,” she pointed out.
When HMRC officials visited one cricket club in Hertfordshire, a five-hour trawl through the club’s accounts and questions about payments to staff resulted in a tax bill for £14,403. “This was HMRC’s assessment of what the club owed in untaxed earnings of bar staff, accommodation and perks for professionals and series of other issues going back over five previous tax years,” said Jenny. “But the warning is clear for all sporting clubs.”
On the question of a club’s governance structure, Thursfields are warning that those in charge of a club need to have a clear understanding. Is the club unincorporated, most commonly a trust or association, or corporate? A company limited by guarantee registered with Companies House. If the club is unincorporated then you should talk advice about whether to change to a corporate structure which could reduce committee members’ exposure to potential personal liability.
Clubs who are concerned about these or any other legal matters, can contact Jenny Smith on 01905 677052 or email jsmith@thursfields.co.uk
