Written by There are over 150,000 sports clubs in the UK, each promoting new experiences and participation in a huge range of amateur sports. These clubs provide fantastic opportunities for adults, children and young people to exercise, socialise and have fun! Sports clubs also play a vital role in local communities, providing spaces for celebrations, life events and community fundraisers.
Structure & Governance
All sports clubs should be aware of their governing documents and legal structures. The most common types of structure adopted by sports clubs are:
- Unincorporated Associations;
- Trusts; and
- Companies limited by guarantee.
Unincorporated Associations – these sports clubs will typically be governed by a constitution or club rules with a small group of trustees and a wider voting membership.
Trusts – historic sports clubs were often established as trusts. These clubs will be governed by a trust deed or declaration of trust which can sometimes form part of a Will or conveyance of land. These organisations also have a small board of trustees and, usually, a wider membership with voting rights.
Companies – in more recent years, sports clubs have been established as companies limited by guarantee (CLG) or Community Interest Companies (CICs). These organisations are governed by Articles of Association and will be run by a board of directors.
Other – some clubs may have more than one type of structure within their group, for example, there may be a trust over a cricket ground and a CLG which operates the pavilion bar. It is important that trustees and members of these sports clubs are aware of their club’s structure and governing documents. If you are unsure about your club’s structure or would like to make changes to your governing document, please get in touch with us.
Status
Most sports clubs operate as not-for-profit organisations, re-investing any profits made into the club and its facilities.
Some sports clubs are registered as charities with the Charity Commission for England and Wales (the ‘Commission’) for the charitable purpose of the ‘advancement of amateur sport’. These clubs are then eligible for all of the benefits associated with being a registered charity (e.g. charitable business rates relief, VAT relief, eligibility for grant funding, gift aid etc). However, they are also required to comply with the regulator’s requirements, submitting annual returns and accounts to the Commission and abiding by rules governing trustees and charitable organisations.
Some sports clubs are registered with HMRC as Community Amateur Sports Clubs (CASCs). These organisations benefit from some of the tax reliefs available to charities (e.g. gift aid, inheritance tax relief, business rate relief etc) but are not required to register with the Commission or comply with its regulatory requirements. CASCs may be required to submit tax returns to HMRC. It is not possible for a sports club to be registered as a CASC and as a charity in the UK.
Sports clubs which are not registered as a CASC or a charity and which are set up as trusts will likely need to register with the Trust Registration Service (TRS). The TRS is run by HMRC and seeks to identify all registrable trusts within the UK to better identify and manage beneficial ownership of assets held in trust. If your sports club is a trust and you’re not sure whether you need to register with the TRS, please get in touch with us.
Land
Most sports clubs in the UK own freehold or leasehold land. This can be one of the club’s most valuable assets. It is therefore important that the land is properly registered, protected and maximised to its full potential. If you are in the middle of a sale or lease negotiation and need additional advice, please speak to a member of our Property Team who would be happy to help.
Most sports club land is registered with HM Land Registry however some historic sports clubs may have unregistered land. The Land Registration Act 2002 made it compulsory to register land with HM Land Registry whenever a registrable disposition occurs (e.g. sale, lease, or appointment of new trustees). At PWW we have a wealth of experience in registering unregistered land and would be happy to provide you with a fee estimate.
Grants
A number of sports clubs receive grants from government bodies and other grant making bodies. We know that this funding can be a lifeline for sports clubs and it is therefore essential that clubs comply with the terms of any grant agreement or contract entered into with grant making bodies.
If there are any changes in the services provided by your sports club or in the status of the club, you should notify the grant making body as soon as possible to avoid any breach of the agreement. The terms of these agreements can often be re-negotiated or novated.
Trading subsidiaries
Many sports clubs operate a club house or pavilion bar as a means of providing a space for socialisation with members and as way of generating additional income for the club. Frequently clubs create a trading subsidiary to manage the pavilion or club house including taking out a liquor licence, employer’s liability insurance and creating a profit for the club. This provides additional protection to the sports club and its trustees in what is considered riskier trading activities.
If you would like help or advice on any of the points raised in this article or have any other questions about sports clubs and the law please get in touch with us or call us on 0207 821 8211 to speak to one of our expert legal advisers.