Following the Budget announcement yesterday, the Government have published the outcome and summary of responses to the charities tax compliance consultation. In addition to outlining proposed changes in the tax regime for charities, the Government’s response to the consultation contains important updates for Community Amateur Sport Clubs (CASCs).

Although not technically charities, amateur sports clubs in the UK can attain CASC status, which affords tax benefits similar to those available to charities. However, for CASCs to be eligible for these reliefs, specific criteria must be met to ensure that the benefits are used strictly to support the community benefit delivered by these organisations. The Government has identified some gaps in the existing rules that could be exploited by some organisations to allow unintended benefits. 

The consultation, originally published under the conservative government in April 2023, explored these concerns including, for example, some CASC persistently failing to file tax returns when required. The solution proposed by the current government following the budget announcement today is to update HMRC’s fit and proper persons test. Under the revised criteria, CASC managers who consistently fail to meet tax obligations—such as the timely filing of returns—will not meet the management condition.

Under the new rules, CASC managers will be given the chance to correct their non-compliance, but failure to do so may lead to their removal and could ultimately result in the loss of tax reliefs. Once the necessary corrections are made and systems are established to prevent future lapses, tax reliefs can be reinstated. 

Although the Government’s response anticipates that instances requiring the restriction of reliefs will be rare, this is an important reminder to all CASC managers of the potential financial impact of non-compliance with the CASC regulations. 

To support these changes, a short-term educational program will be launched by the Government in collaboration with sector representatives. Draft changes to the fit and proper persons test are expected to be published in 2025, and it is understood that the Government will launch a consultation on the revised draft before the rules come into effect. 

For more information

For more information on the CASC regulations or the fit and proper persons test, please contact Mahnoor Butt or Shauntelle Murphy.