(although they say they’re not)
Chris Gayle is too cool for HMRC
HMRC has denied it is targeting local sports clubs after Sawbridgeworth Cricket Club, a 151-year-old amateur a cricket club in Hertfordshire, was sent a tax bill of over £14,000 last year.
Chairman Val Waring said he was “stunned” when the bill arrived and said “We only have an annual income of around £21,000, this may force the club to close”. However, after the press publicity, HMRC agreed a schedule of staged payments and waived penalties, with the club then able to settle the bill with money raised from fund-raising events and an interest-free loan.
Community amateur sports clubs are exempt from corporation tax on profits of less than £30,000 a year, but employees such as bar staff are subject to PAYE.
An HMRC spokesperson said the department wasn’t targeting amateur clubs, but non-compliance with the PAYE regime; however a nationwide telephone survey of similar clubs around the country By AccountingWEB, revealed that this type of club seemed to be getting disproportionate levels of tax enquiries and most were not just concerning PAYE. It appears HMRC have started with cricket clubs and are now starting to target other sports and social clubs.
Baker Tilly tax partner Mike Down, who is currently dealing with three similar cases, commented. “They (HMRC) are targeting them and there are many evidences of it. There are a number of clubs who have been picked up by the Revenue and I believe HMRC targeting local cricket and other sports clubs is fairly common” , “It’s not an issue that RTI has highlighted as it’s been going on a long time before that and HMRC are jumping in and judging all people at the clubs as employees. While there may not be a concentrated campaign, there are a significant number of Revenue people looking at cricket clubs. I now believe that all types of sports clubs are at risk,” he added.
The England and Wales Cricket Board (EWCB) is urging amateur clubs to seek advice, especially as nearly every premier league club in England and many others have likewise had similar visits. The board advised members to seek professional help over NIC payroll and PAYE deductions and have issued guidance advising members to challenge HMRC calculations and use the results of the review to negotiate with HMRC.
After cricket, what sports will be next, football, bowls? Certainly, HMRC have started looking at rugby clubs and I suspect that this is because they are easy pickings for HMRC and it now appears that they’re widening the net.
Working Men’s Clubs Targeted By HMRC Too
And it isn’t just sports clubs under scrutiny by the taxman, local working men’s club appear to be the next target. A club in the Shropshire area recently held an AGM to ask members for £3,000 to keep the club open, following numerous HMRC fines for non-compliance totaling £12,000.
Targeting Working Men’s Clubs is a bit of a joke
As we all know, this type of club tends to be run by amateurs, with most of their time given free for the love of their sport or club. The problem is record keeping isn’t always the first priority and many individuals are paid modest honoraria, to cover assumed out of pocket expenses. Unfortunately, if a complete record of expenses isn’t maintained, honoraria to individuals are subject to Income Tax and National Insurance contributions under PAYE. Also, largely because of inadequacies in record keeping, many fund-raising events, which are in effect donations to the club, have been treated as income and HMRC have demanded tax and in some cases VAT, from the club.
When asked to comment, all a HMRC spokesman would say was, “The lack of compliance in these sorts of organisations is staggering,” Whilst in some cases that may well be true, the Revenue know that in reality, if the club kept perfect records, there would be very little possibility of them finding any unpaid tax. They just seem to be targeting easy pickings and ignoring the unfairness and morality of what they are doing.
Clubs faced with this kind of HMRC attention should seek an accountant’s advice; members have been advised by their associations. If they can’t do the payroll within the club and let’s face it, not many would probably want to, then this can be outsourced to an accountant or specialist payroll bureau for relatively modest amounts.
David Jones is the Senior Partner and Founder of Morgan Jones & Company. Born in Liverpool and an Accountancy graduate of the University of Wolverhampton, David spent twenty years working for the Customs & Excise in London then Shrewsbury before starting his own business. David's depth of knowledge of the UK tax system and his ability to communicate this learning has seen Morgan Jones & Company grow into Shropshire's most respected Accountancy Practice.