CHAPTER 5
Sports Clubs5.1 Charity Status for Sports Clubs
5.1.1 The existing mandatory relief scheme for charities applies to any organisation that is a charity. Therefore, sports organisations that are charities and use their premises wholly or mainly for charitable purposes are entitled to the 80% mandatory relief. On 30 November 2001, the Charity Commission announced revised criteria for the charitable status of certain sports clubs. Clubs which meet these criteria will be eligible for the mandatory relief.
5.1.2 The Charity Commissioners recognise the following as charitable purposes:
The promotion of community participation in healthy recreation by the provision of facilities for the playing of particular sports; and
The advancement of the physical education of young people not undergoing formal education.
5.1.3 Not all organisations describing themselves as community sports clubs are necessarily charitable. Along with the general requirements of charitable status, a community sports club seeking charitable status on this basis will need to make its facilities available to all members of the public who wish to use them, regardless of their levels of skill. And the sport concerned must be one that is capable of improving health or fitness. The criteria that community amateur sports clubs would need to meet to be recognised as charitable are explained in guidance issued by the Charity Commission on this subject. The guidance can be viewed at: www.charity-commission.gov.uk/registeredcharities/sport.asp
5.1.4 The date of registration with the Charity Commission should be taken as the effective date for entitlement for mandatory rate relief (this being conclusive evidence as to charitable status).
5.1.5 Many more sports clubs will qualify for charitable status under the revised criteria. However, billing authorities may consider applications for discretionary rate relief under section 47 for non-profit making sports clubs which are unable to qualify for charitable status (and hence mandatory rate relief under section 43(5) or 45(5)) but nonetheless contributes to the local community.
5.2 Discretionary relief for non-profit making sports clubs
The granting of discretionary rate relief under section 47 is a matter for individual billing authorities. However, to help achieve more consistency of treatment when considering whether a non-profit making sports club which does not have or decides not to obtain charitable status should receive discretionary relief, authorities may wish to consider the following issues. Authorities may also wish to bear in mind the legal definition of a Community Amateur Sports Club (CASC) at Annex A, as set out in schedule 18 of the Finance Act 2002 (which exempts specified community amateur sports clubs from corporation tax).
5.3 Access to clubs
5.3.1 Membership should be open to all sections of the community. However there may be reasonable restrictions placed on membership which relate, for example, to ability in a sport or to the achievement of a standard in the field covered by the organisation or where the capacity of the facility is limited, but in general membership should not be exclusive or restrictive.
5.3.2 Membership rates should not be set at such a level as to exclude the general community. However, membership fees may be payable at different rates that distinguish the different classes of membership such as juniors, adults, students, pensioners, players, non-players, employed and unemployed. In general, the club or organisation must be prepared to show that the criteria by which it considers applications for membership are consistent with the principle of open access.
5.3.3 Does the organisation actively encourage membership from particular disadvantaged or under-represented groups in the community e.g. young people, women, older age groups, persons with disability, ethnic minorities' etc? An organisation that encouraged such membership might justify more sympathetic consideration than one which made no effort to attract members from groups particularly deserving of support.
5.3.4 Are the facilities made available to people other than members e.g. schools, casual public sessions etc? The wider use of facilities should be encouraged and rate relief might be one form of recognition that an organisation was promoting its facilities more widely.
5.4 Provision of facilities
5.4.1 Does the organisation provide training or education for its members? Are there schemes for particular groups to develop their skills e.g. young people, the disabled, retired people? An organisation providing such facilities might deserve more support than one that did not.
5.4.2 Have the facilities available been provided by self-help or grant aid? The fact that a club uses or has used self-help for the construction or maintenance of its facilities or has attracted grant aid, might be an indicator that they were more deserving of relief.
5.4.3 Does the organisation's facilities include a licensed bar? The mere existence of a bar should not in itself be a reason for not granting relief. The authority should look at the main purpose of the organisation. In sports clubs for example the balance between playing and non-playing members might provide a useful guide as to whether the main purpose of the club is sporting or social activities. A club whose main aim is to bring together people with similar sporting or recreational interests should not be excluded from relief just because of the existence of a licensed bar. Some authorities already include in their decision making criteria how much in percentage terms they would deduct from the overall relief granted to clubs with bar facilities based on how much additional revenue the facility raises.
5.4.4 Does the organisation provide facilities that indirectly relieve the authority of the need to do so, or enhance and supplement those that it does provide? Authorities should not refuse relief on the grounds that an organisation is in competition with the authority itself, but should look at the broader context of the needs of the community as a whole. A new need, not being provided by the authority itself but identified as a priority for action, might be particularly deserving of support.
5.5 Other considerations
5.5.1 Is the organisation affiliated to local or national organisations' e.g. local sports councils, county or national representative bodies? i.e. are they actively involved in local/county/national development of their interests?
5.5.2 Is the membership drawn from people mainly resident in the billing authority's area? Although authorities will have in mind that 25% of the cost of any relief given which will be borne by the billing authority, particular difficulties may arise with hereditaments which straddle or are close to billing authority boundaries. In these cases, a proportion of the membership may come from another billing authority area. Also, for geographical reasons, or because of the nature of the terrain, particular facilities may be the only ones available for a wide area. In such cases the joint use of facilities by one or more similar organisations is not uncommon. In most cases there will be a measure of reciprocity between the membership of organisations from different areas.
5.5.3 Are members paid to participate? Authorities should consider whether to grant relief where payments or other significant benefits are provided to players. Exceptions could include for example, the reimbursement of reasonable travel expenses for players or officials and reasonable provision and maintenance of club owned equipment necessary for playing the sport. Authorities may choose to look favourably on clubs whose paid players contribute more to the club than just playing, e.g. by coaching younger members.
5.5.4 Authorities may wish to consider the extent to which the activities of the organisation contribute to a local or regional community strategy and/or authority objectives for building neighbourhood identity, community building or social inclusion.
5.5.5 Authorities may wish to add further criteria or substitute relevant alternative criteria that are appropriate to the furthering of their policies and the needs of the community such as development programmes. They should also bear in mind the need to encourage new activities in the wide range of organisations for which relief from rates is available.
5.5.6 Authorities may wish to consider using a points system for the granting of relief which might give greater weight to any particular aspect of the role of community clubs authorities wish to promote. The amount of relief given need not be 100%, but might be lower if some criteria are not fully met. Indeed, some billing authorities already operate a points system in considering applications.
5.5.7 To assist sports clubs with their long term planning, authorities may wish to indicate in their decisions the likelihood of continued rate relief in future years. Authorities may also wish to explain the likely circumstances in which the relief might be varied or revoked, and the timing constraints placed on the authority in making such a change.
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Published 5 December 2002
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