Thought the below might be of use to some, was sent round clubs by our board.
TAXATION MATTERS FOR CLUBS
I am aware that a number of cricket clubs in Shropshire have been ‘visited’ by HM Revenue and Customs. The main focus of their attention has been on pay as you earn and I will try to highlight the main issues for clubs to be aware of, in order to help mitigate the risks and consequences of such an inspection.
Cricket clubs are generally run by volunteers, for the benefit of its members, but they are not exempt from tax compliance. Non-compliance can result in a bill for underpaid tax as well as interest and penalties.
Pay as you earn
Payments which could give rise to PAYE issues include those to players (including overseas players), bar staff, cleaners, caterers, coaches, groundsmen etc.
Larger clubs may already have a PAYE scheme and should review payments which are not currently subject to PAYE but possibly should be.
Many clubs, however, will not have a scheme but their responsibility does not end there. HMRC may still carry out an inspection and, if they find payments that should have been subject to PAYE, the failure to register and file end of year returns may give rise to penalties and interest as well as unpaid tax. More information about registering, and your responsibilities, can be found at
www.hmrc.gov.uk/paye/index.htm or by simply googling HMRC PAYE.
Clubs may be paying people on a self-employed basis however this may be inappropriate. The distinction between self-employed and employed status is complex but the tax status of a person to whom payments are made is a matter of fact, not choice. A club cannot just assume or decide that someone is self-employed. If a worker is genuinely self-employed (e.g. provides own equipment, decides own hours of work, not working under close supervision, is able to send a substitute worker in their place etc.) then it is possible PAYE need not be applied but invoices should be obtained and it will be helpful to have a simple contract for services (as opposed to a contract of employment for employees) in place.
If expenses are paid or benefits provided, such as a car or accommodation, to players, this may need to be reported to HMRC on form P11D. Again there may be penalties for non-compliance.
Other employer responsibilities
Being an employer also gives rise to other responsibilities such as ensuring that workers are paid the national minimum wage, providing contracts of employment and (where there are five or more employees) access to a stakeholder pension scheme.
VAT
Larger clubs should be mindful of the VAT registration threshold, currently £77k. If your ‘taxable supplies’, such as bar sales and sales of kit, exceed the threshold in any 12 month period, then your club will need to register.
Corporation tax
Normally HMRC accept that amateur sports clubs are run on a non-profit making basis for the benefit of its members and, as such the only income chargeable to tax would be investment income and capital gains. Registering as a charity or a community amateur sports club (CASC) can bring added exemptions and reliefs on income and gains, as well as non-domestic rates relief and the ability to reclaim tax on gift aid donations.
Recommended action
Clubs should review their PAYE, national minimum wage and other tax compliance procedures and seek professional advice where necessary.
If your club has a PAYE scheme, review payments made to ensure that PAYE is being applied in all appropriate cases.
If your club does not have a scheme, review payments to see whether PAYE should be applied and register as an employer as soon as possible.
If your club is inspected by HMRC, seek advice and do not automatically accept the calculations put forward by HMRC. Prepare you own calculations and be prepared to make a robust defence, but to do so you will need to ensure your records and procedures are as comprehensive as possible.
These notes are intended as helpful guidance only and should not be relied upon in specific circumstances. The related tax legislation is complex and professional advice should be sought. Clubs may also wish to refer to guidance notes issued by the RFU and FA to rugby and football clubs as much of the content is transferrable between sports (google ‘RFU PAYE guidance notes’ and ‘PAYE and semi-professional football’).
David Blofield FCA
Finance Director
Shropshire Cricket Board
Author
Topic: HMRC are investigating Clubs (Read 5254 times)