CASC changes are ‘unworkable’ for clubs
By Alistair Dunsmuir
A VAT expert has said that the government’s proposed amendments to CASC, which provides tax relief for golf clubs, are unworkable and the ‘politics of envy’.
The government is proposing that if members of golf clubs pay more than £1,040 per year to play the game – which includes the cost of their annual subscription plus all other expenditure – the golf club can no longer secure CASC status.
Hundreds of golf clubs have registered as Community Amateur Sports Clubs (CASC) since 2002, which entitles them to business rates relief, partial corporation tax exemption and the ability to claim Gift Aid on voluntary donations. In exchange the clubs have to be open to the entire community, while all profits must be invested back into the club.
However, some proprietary golf clubs have complained to the government that some richer private members’ golf clubs have abused the spirit of CASC to gain unfair competitive advantages.
Vivien Saunders, chair of the Association of Golf Club Owners, said: “Proprietary clubs have been hit hard by having to compete against hugely profitable golf clubs on CASC, which enjoy an 80 percent business rate relief.
“Due to many loopholes, cunning accountants and dodgy interpretations of the rules, some mainstream golf clubs have been able to register as CASC facilities.
“One of the worst examples is a club in Surrey which has a licence for civil ceremonies and enjoys a rate relief of over £46,000. A company would need a profit of £4.6 million to save the £46,000 given away to this club in business rates.”
Partly due to this, the government announced in March that it will ‘clarify the rules’ regarding CASC registration and revealed that it will not process applications where participation costs for members are more than £520 per year – meaning that most golf clubs can now no longer apply. This month the government issued its consultation document for the future.
This states that annual membership subscriptions of golf clubs that can apply, plus the cost of playing golf at the club, cannot exceed £1,040, that the maximum turnover from non-golfing activities must be 30 percent and that clubs can only have a maximum of 50 percent of non-golfing members.
The consultation document suggests that clubs that have income in excess of the limits should form trading subsidiaries with tax relief on any profits paid over to the club.
However, Robert Twydle, a VAT expert with Hillier Hopkins LLP, and tax adviser to several golf clubs, has said the proposed changes are ‘unworkable’.
“Quite frankly, the limit on subscriptions is unworkable for most clubs in the south east of England as this figure has to include all of the costs of participation, including clubs, balls, shoes and wet weather gear,” he said.
“The government is trying to discriminate against more expensive sports and has no idea of the costs for golf clubs.
“I understand that they do not want clubs that are, in reality, trading businesses, to be CASCs, but in trying to limit the levels of [non-golfing] turnover they are missing the point. In most clubs, any non-sporting income is raised purely to subsidise the costs of playing the sport and, in the main, comes from the existing membership. If you try to restrict this, the only effect is to increase the cost of membership!”
Twydle added that other changes are ‘petty’ and the ‘politics of envy’.
“I can understand wanting to have a limit on social membership but to then try and identify who this covers is, to me, petty in the extreme,” he said.
“The thrust of the proposed changes is to encourage more clubs to become CASC but in my opinion will have precisely the opposite effect. This will have much more of an impact on clubs in the south east of the UK than elsewhere.
“I can see the signs of extensive lobbying by vested interests who believe that CASC status should not apply to clubs which have higher costs of entry and earn significant income from utilising their facilities to generate additional income.
“This is the politics of envy rather than anything else.”
The consultation process ends on August 12. To have your say, click here.
By Alistair Dunsmuir
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If golf clubs are to survive, and indeed if golf itself is to survive, golfers themselves need to be more realistic and forward thinking, and to “keep up with the times”. A golf club is very expensive to keep going in current times, with many including mine no longer prepared to subsidise the mediocre golfer, who does nothing to improve his, or her, game and moans when prices go up 10 pence.
Carl Weininger.
If my golf club was to join the CASC arrangement would it be possible in the future for the golf club to sell off part of its assets for the benefit of the club ?
So now we know ! Having just read England Golfs CASC consultation submission they have come out heavily in support of CASC abusing Private Golf Clubs. This was predictable but never again can they credibly claim to represent Proprietary Clubs or be working towards tax fairness in Golf. What is astonishing however is that UKGCOA’s submission which was closely coordinated with England Golf just sits on the fence and also does nothing to advance the interests of Proprietary Clubs who they claim to represent. It looks to me like the whole board of UKGCOA are hoping one day to be elevated to the board of England Golf! We now await the response of AGCO, the only body that can credibly claim to represent the commercial sector on CASC, VAT and Corp Tax issues.
A much simpler way would be to make all the rates reasonable, we pay £800 per week for basically nothing more than a ‘Ponce Tax’. Proprietary golf clubs provide exactly the same service to the game as member golf clubs and provided in my opinion that the golf club is a member of the EGU or SGU etc then ALL clubs should be afforded similar conditions of Vat, Rates and concessions. There will be no more new sporting facilities in this country(as money for new projects is raised privately), unless there is a change, as it stands no one in their right mind would try and compete against next door’s club that has those concessions and tax breaks. What amazes me is how stupid the government are not to see such a crazy situation and when pointed out to them they still defend. I am equally stupid of course for still trying to compete, last year we turned over close on a million, the government collected £340,000 of us and we made a small loss on a record turnover, we employ 30 staff and if we were a week late with our VAT they would want to close us down.
Hopefully the government has finally realised that CASC status has been seriously abused by Private Members Golf Clubs for whom it was presumably never intended to apply anyway. They have abused the spirit of the legislation because it is quite clear that the vast majority of these private members golf clubs are not “Community Clubs” in the sense that was intended by the legislation (“locally based amateur sports clubs that often struggle to survive but make a valuable contribution at grassroots level to their local community”) and many of them are operating large scale commercial operations in direct competition with tax paying golf operators like ourselves. They are not really open for Membership to the whole community at reasonable price and CASC has just been used as a cynical way to avoid business rates. When you read Mid Herts GC members consultation document on CASC (which until recently was available online- haha) which refers to other CASC Golf Clubs confirming little in the way of “Revenue interference” with the way they run their Clubs or police CASC it is quite clear that CASC was promoted to Golf Clubs by Twydle and others like him wholly for the Business Rates benefit and had nothing to do with the Community orientated spirit of the legislation.
Take for example Finchley Golf Club (one of the 8 competitors around us currently operating as CASC’s and an aggressive commercial competitor for Visitor Green Fee business) where you can be absolutely certain that the make up of the Membership hardly reflects the diverse multicultural nature or demographic variations of of its surroundings. Instead CASC (the UK taxpayer) is subsidising the Wealthy Members of an Upper Middle Class Private Golf Club to the tune of circa £45,000 pa in Business Rates relief whose Accountants, to add insult to injury, then somehow concoct their Corporation Tax returns, to show no Taxable profits on their approx £100,000 of taxable visitor Green fee income. The only people they apparently fool with this are HMRC whose Corp tax take from Private Members Golf Clubs taxable visitor revenues is now almost zero. Even the largest Clubs like Sunningdale, Swinley, the Berkshire and Walton Heath, who take millions annually in taxable visitor revenues have paid less Corp tax in total between them all in the last five years than our lowly North London municipal course paid in 2011.
Robert Twydle’s comments are not therefore unexpected given that it is firms like his which have been employed to advise on CASC and mitigate any taxable profits for Private Golf Clubs. You can hardly blame him for being upset that HMRC might finally call an end to the party.
The whole Golf Sector is now irretrievably split between the Private Golf Clubs, represented by the Establishment bodies of England Golf and the R&A and the Accountancy profession, who are desperately trying to conserve the status quo and tax breaks for Members Clubs and the Proprietary sector, represented by AGCO and we hope also by UKGCOA (although the latter are very conflicted because of their close links to England Golf and the presence among their Membership of Private Clubs and “so called” Charities like Mytime Golf) who are keen to see CASC abuse ended, the VAT exemption for Golf terminated and proper scrutiny and taxation of Members Clubs very profitable Visitor green fee revenues.
It will be interesting to see if England Golf and the R&A make a formal response to the CASC consultation. Interesting because if they do it will truly flush out whether England Golf, who profess to be in favour of tax equality for Members and Proprietary clubs, really are or not. They can hardly support Proprietary Clubs interests unless they endorse the Governments preferred proposals to limit CASC eligibility to those Clubs with Annual Subs below £540 and to place an absolute cap on Non Members income of 20% of Turnover with an upper limit of say £50,000. We would prefer them to go further and restrict Non Members income to a maximum of £30,000, the same level as the current Cap on Corp Tax free CASC revenues. This Current Cap of £30,000 of tax free additional income is really meaningless anyway as virtually no Private Golf Club in the UK, whether CASC or not, pays any Corporation tax.
Every proprietary Club in the land should be responding to this CASC consultation document themselves or at least sending an email to Vivian Saunders confirming their support for AGCO’s submission. Sadly this will likely fall on deaf ears as Proprietors of Golf Courses are too busy running their businesses but you can be pretty sure that every secretary of every private club will be lobbying against these proposals.
It is time for a level playing field. Lets us hope the Government is brave enough to go ahead with these proposals which will not be popular amongst its supporters.
The whole conversation appears to be around wealthy golf clubs in the south east of England.
A simple point. Members clubs are not for profit organizations. Any surplus is spent to maintain and improve the facilities of the club. Proprietary clubs are privately owned and unless things have changed recently any profit goes to the owners of that facility.
My recollection is that when CASC was introduced it was to increase participation in sport. In 2002 golf was a sport and in 2013 is still a sport unless someone has rewritten the rule book.
HMRC are really making a rod for their own back. I can just imagine one of their officials, with no knowledge of golf trying to establish the cost of golf clubs (which I think vary in price).
I also seem to recall hearing that HMRC involvement in CASC would be a “light touch” . Pasties comes to mind!!!
I replied on the hillier-hopkins blog by Twydle
Submitted by Andrew Smith on 18 June, 2013 – 16:47.
“Whilst golf clubs are only briefly mentioned in the consultation document, I can see the signs of some extensive lobbying by vested interests who believe that CASC status should not apply to Clubs which have higher costs of entry and earn siginifcant income from utilising their facilities to generate additional income. For me, this is yet again the politics of envy rather than anything else.”
I would argue that there are proprietary golf clubs that give their members the same experience as one that they would find at a members’ club. Also they keep subscriptions as low as possible. More open and inviting new golfers to the game. Proprietors such as I have basically given 150 acres of private land for golfers to use and with the over supply of golf courses they then cannot compete on a level playing field due to VAT, CASC / Business Rate Reductions & Corporation Tax distortions. And when the weather gets really bad they put their own hands in their pocket rather than get members to pay for any shortfall.
I’m not envious – just disappointed that the establishment and the author above cannot understand that distortion of competition is unfair.