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Posted 22-06-2011

CASC consultation meeting 21st June 2011.

Explanation of CASC: I want to take a few minutes to explain about CASC and tell you why I believe it is right for Congleton Golf Club. I find that when discussing complex issues people will make a very good point or ask a great question and I can get a bit “thrown off course”, so I hope you won’t mind if I read this out and ask you to keep your questions until the end - there will be plenty of opportunity for everyone to have their say.

A copy of this will then be available after the meeting, and for anyone who has been unable to attend tonight. I am happy to try and answer any questions I can, but please bear in mind that we may not have thought of everything, and one of the purposes of this consultation is to give time before the EGM for issues to be investigated and resolved so we have all the facts next month. In my conversations with members there are some who have expressed opposition to this proposal and have voiced their concerns to me. I have listened to those concerns and will try to address them this evening – I hope that everyone comes with an open mind and is willing to listen to the results of the research.

Equally, I see this as a 2-way consultation. I will keep an open mind and am willing to be persuaded as well. In case you weren’t already aware, CASC stands for Community Amateur Sports Club and refers to legislation introduced in April 2002. I obtained a lot of information from HM Revenue and Customs (HMRC) who administer the scheme on behalf of the government, and the CASC Development Forum which brings together the key stakeholders engaged with the scheme, including experts in club sport, the law, policy specialists and officials from the relevant government departments.

The Forum is chaired by Richard Baldwin, Honourary Member of the Sport and Recreation Alliance and former Tax Consultant with Deloitte. They run the website called cascinfo.co.uk which says “Sports clubs play a valuable role in their communities. The CASC scheme recognises this important role by distinguishing between clubs and businesses for rates and tax purposes, ensuring money is kept in sports clubs. Both property and non-property owning clubs can significantly benefit from the scheme”. For a long time, the government have been concerned with the nation’s health and fitness, not least because of the cost of obesity on the health service and care providers. As a result the government has tried to encourage activity through sport and, for the last 9 years or so, one of the ways they have gone about this is to use CASC to provide financial support for local amateur sports clubs.

Rather than using a system of grants (like the lottery), the main way they provide financial support is through the provision of tax reliefs - they recognise that we pay for the running of this club from our personal income which has already been taxed – clearly, their view is that it is unfair that your taxed income is taxed again when you are supporting a local club which provides sporting facilities for the community.

The tax breaks on offer are: a minimum of 80% relief on non-domestic rates (our rates are about £14,000 per year); no corporation tax (and no tax return to worry about) – this represents a small saving as we only pay corporation tax on our bank interest earned; and the ability to use gift-aid for donations – we would be able to reclaim 28p per £1 for funds donated, thereby boosting the funding for the juniors and the captains’ charities.

All together this represents a potential saving of about £12,000 which, with a club membership of approximately 300, that £12,000 saving means about £40 per person per year. As treasurer, having seen the potential financial benefits to the members and the club, I made a commitment at the last AGM to investigate further and report back. I know that, before I joined the club, you considered CASC in the summer of 2004 when the legislation was relatively new.

At that time it seems that the ‘wait and see’ view prevailed, partly because not many golf clubs had registered and rumours were rife of problems and set-backs. Along with the club Chairman I approached the Directors of CGC Ltd to seek their support for this action. They wanted further information before making a decision, in particular on the experiences of other clubs, and as a result Ray Brindley and I prepared the report you will have seen on the notice board and I hope you have had an opportunity to have a look at that – from that you will see that the feedback we obtained from local clubs which have registered for CASC has been very positive.

We have now waited and seen and many clubs have now joined CASC – there is a list on the HMRC website which gives the names of all the sports clubs who have registered and as at May 2011 there is a total of 5,975. I have reviewed that list and extracted all the golf clubs I could see – they amount to 458 (7.67%). You may think that 458 isn’t many from all the golf clubs in the UK, but don’t forget that a lot of golf clubs aren’t eligible as they are run for profit or not on an amateur basis.

Ray and I presented our report to Management and the Board in April and both groups unanimously approved moving forward to this consultation meeting and an EGM. Some more information on the CASC scheme itself - to me, CASC is similar to other government incentive schemes which encourage us to do things. When the government want to encourage you to make pension arrangements – they introduce a tax relief and we all enjoy this tax relief in our pension schemes. When they wanted to encourage home ownership they introduced a tax relief on mortgages (MIRAS - Mortgage Interest Relief At Source).

When they wanted to encourage savings and investments they introduced tax free plans like PEP’s and ISA’s. When they want to encourage activity – they provide tax relief to sports clubs. So, the positives to the club are that, in our case, the savings on non-domestic rates, corporation tax and the benefits available through gift aid would provide us with reduced expenditure and/or increased income of around £12,000.

As I said earlier, this equates to approximately £40 per year per person. If we achieve these savings then the club will benefit from greater investment and/or members will benefit from lower subscriptions. Looking at the rules of CASC and what we would have to do to get this tax relief, the HMRC say:

“The conditions for becoming a CASC are fairly easy to meet.

Your club must:

be open to the whole community – we’ll look at that in a moment.
be organised on an amateur basis – we are. We don’t distribute any profit and we don’t pay any golfers.
have as its main purpose providing facilities for, and promoting participation in one or more eligible sports – golf is an eligible sport.
meet the location requirement – in the UK counts.
meet the management condition – this is a test of our rules and constitution which I believe we meet already (although we won’t know for sure until we make a formal application).

To be “open to the whole community” this means in practice:

membership of the club is open to all without discrimination – With the equality act as well as the race relations legislation you will already know that it is illegal to discriminate as well as against CASC rules.
the club's facilities are available to members without discrimination – they are.
any fees are set at a level that does not pose a significant obstacle to membership or use of the club's facilities – we are confident that they are.

I think we already meet the criteria (although, as I said earlier, we won’t know for sure until we make a formal application). What about the negatives? Is it really possible that the government is going to give us £12,000 a year and not want anything in return? They do want something in return – my point is that we already give it to them.

The government want to encourage activity and sport through amateur clubs - that’s what we do. The government want it to be available to as many people as possible – so do we. The government don’t want us to profit from the subsidy – nor do we. They want us to provide sporting facilities for the community – so do we.

So what have been the objections and what have we to say about them? In the 2004 debate, concerns were raised over “open membership” and what that might mean to the club with regards to being forced to accept anybody who wanted to join. The CASC rules say “Clubs can refuse or revoke membership, on non-discriminatory grounds, where the membership, or continued membership of the person concerned would be likely to be contrary to the best interests of the sport or the good conduct and interests of the club. These are internal matters for the club. HMRC will not become involved in such internal issues. Provided the club has acted openly following its CASC compliant constitution there should be no effect on the clubs CASC status.” In view of this I don’t think we have anything to worry about. It has been expressed that other clubs have joined CASC and are now unhappy with the situation.

As part of the report to Management and the Board, Ray Brindley and I undertook an exercise to contact local clubs who have registered for CASC, and particularly those who had been identified to us as having had problems with it, and I can confirm that we found no such concerns. I know there are some who might take the view that “they would say that” or “they haven’t asked the right people or clubs or questions” but I can assure you that we contacted clubs openly and fairly and did not ask loaded or leading questions – the questions asked and the actual responses from the clubs can be seen in the report we published which is complete and unedited.

From that research, it is also clear that the myths about government and local authority interference have been just that – myths. The clubs which have registered as CASCs have experienced no issues with membership selection or challenges to their pricing arrangements. So what are the other concerns? It has been said that one of the risks of joining CASC is that we sign up to it, and then the government (or a new government) take the tax relief away – whilst no-one can give any guarantees, I can tell you that there are now just under 6,000 CASCs. The average tax relief is worth approximately £2,000 (source: cascinfo.co.uk) – therefore the total cost of this government scheme is about £12m – a drop in the ocean in tax terms.

As I said in the Q&As provided with the EGM notice, the EGU CASC Guidance Notes state: “The legislation should be seen as stable and providing reliefs. If it is repealed (unlikely but possible) it will most likely be repealed in its entirety leaving no residual limitations, recapture of benefits or future costs.” Further evidence for this is that the CASC legislation survived the “Comprehensive Spending Review” carried out by the current government when they were elected last year. If CASC was not targeted in this recent and most thorough examination of public spending then I agree with the EGU that the government changing these rules is very unlikely.

The ‘follow-on’ factor for consideration is the distribution of proceeds on the break up of the club. Joining CASC commits us to run a golf club in the area forever. We can sell the land here but then would have to provide golf at another local site. In the event that this was not possible then the proceeds of the sale of the club would have to be passed to the sport governing body (the EGU) for them to deal with.

It has become clear to me that many members, and in particular those who have joined since 2000, are unaware of the legal set up of the club. If you don’t know already, the land and club house are owned by CGC Ltd. Ray Brindley (Secretary of the Ltd Co is here to explain more if needed, but the relevant information (which was in our joint report) is that “the Memorandum and Articles of Association of CGC Ltd were amended in February 2000 to encompass the requirements of the Companies Act 1908 to 1985 and, in essence, that amendment states that in the event of the dissolution of the Club the proceeds do not go to individual members, but to another golf club of the same name elsewhere; failing which the Trustees make a distribution to another non profit making body, or in default of such an agreement the sporting charity or charities nominated by the Secretary of the Home Golf Union.”

What this means is that by joining CASC, members are not be able to profit from the sale of the club, but that is how the club is set up now, so I don’t see that joining CASC affects that situation. It has been said that “it’s easy to spend other people’s money”. I agree, and the easy option here would be to do nothing. This proposal is about saving money – your money. I am aware there is a view in the club that savings of this amount could be made elsewhere, but that is not what we are considering here, and I don’t see the issues as connected – if there are other opportunities to save money then they should be considered as well as (not instead of) this proposal. This needs to be considered on its merits alone and if members have other suggestions for savings in other areas they can make those suggestions through the usual channels. To summarise, I understand the view that this is a “leap of faith” – I hope that the concerns over control and membership have been dealt with, so that leaves the issue that we sign up for CASC and then the tax relief is withdrawn leaving us with the CASC rules to abide by and no ongoing financial gain. I repeat my view, and that of the EGU, is that this is unlikely – that the legislation is “stable” and if it were to be repealed it would be repealed in full leaving no residual obligations – this then is the choice and decision we have to make. My view is that the way the club is currently set up already meets the obligations of CASC status and therefore my recommendation is that the financial gains are worthwhile. This is why I think it is right for CGC and this is the reason why I am proposing that the club applies to join the CASC scheme.