Legal Structures at grassroots football clubs
What do we mean by “legal structure”?
A legal structure is a type of legal “entity” or options for existence for an organisation. There are a number of different legal entity options for clubs to choose from and choosing the right one is important to protect liability and lay the correct foundations for your club to grow and develop.
Initially it’s important to recognise there are 2 types of legal structure - Unincorporated or Incorporated.
E.g. Trusts or Unincorporated Association
They have no separate legal personality
Contracts through trustees (name for these people does not matter, e.g. could be “committee members”)
Holding land or buildings requires trustees
Trustees or ‘committee members’ have personal liability
Limited Companies
Shares
Guarantee (‘CLG’)
Community interest (‘CIC’)
Charitable Incorporated Organisation (‘CIO’)
Community Benefit Society (‘CBS’)
How to choose your legal structure will depend on what activities your club is carrying out. Consider the following:
Is your club entering into contracts for services?
CASC (Community Amateur Sports Club)
This legal structure as the title suggests is only available to amateur sports clubs. A quick overview:
- Non-charitable activities are permitted
- Some member benefits are allowed
- A CASC only registers with HMRC for tax benefits
Clubs can register with HMRC for:-
• Gift Aid on donations (does not include membership fees); exemptions from Income, Capital gains and Corporation taxes (subject to limits)
Apply to Local Authority for:-
• Business Rates Relief (mandatory 80%, discretionary up to further 20%)
• Trading profits must be under £50,000 pa
• Rental income must be under £30,000
• If members have full voting rights:
No tax on those membership fees
Exemption for selling food and drink to them (e.g. in members’ bar)
• Gift aid can't be claimed on any club membership fees
Based in UK/EEA
Managers must meet ‘fit and proper persons’ test
At least 50% of members must be playing member
Limit of £100,000 turnover from non-members including £30,000 maximum property income from members and non-members
Must be open to all
Annual membership fee limit £1,612
If costs of membership (fees and associated costs) exceed £10 per week, must offer help
Limits on payments to players and others - click here for further guidance
If a club can’t meet conditions for registration as a CASC, it's unlikely they will meet conditions for registration as a charity
CHARITIES
Charities are different to CASCs they are not only available to sports clubs. Your charity structure is defined by its ‘governing document’ (the legal document that creates the charity and says how it should be run - see Governing Document section for further guidance).
There are four main types of charity structures:
- Charitable incorporated organisation (CIO) - Incorporated
- Charitable company (limited by guarantee) - Incorporated
- Unincorporated association - Unincorporated
- Trust – Unincorporated
Register with HMRC Charities for:-
Gift Aid on donations (including some membership fees); exemptions from Income, Capital gains and Corporation taxes, Inheritance tax relief; Stamp duty land tax / Wales Land Transaction Tax exemptions
Apply to Local Authority for:-
Business Rates Relief (mandatory 80%, discretionary up to further 20% - varies per local authority)
Registration Conditions – Charity Commission
- Must not be Exempt or Excepted
- Must have income over £5,000 pa (unless set up as a CIO)
- Must have exclusively charitable objects and activities
- Must meet the public benefit test
Suitable purpose for sports bodies to be established as a charity:
- Advancement of (an) amateur sport
- Advancement of healthy recreation by encouragement of participation in (amateur sport)
- Click here for further guidance
A public benefit assessment by the Charities Commission will assess the following:
- Who can join?
- How much are the fees?
- Can people in poverty access? How?
- Is there private benefit to members, trustees and/or players?
Charity must confirm status by reference to registered number / evidence of Exempt or Excepted status and provide evidence on application form in relation to responsible persons and finances
Other unregistered charities:
Apply for confirmation of status and provide other information / evidence (HMRC will assess whether you are a charity at all)
INCORPORATED ASSOCIATIONS
Company (limited by guarantee)
- Incorporated by Companies House (and may be registered with the Charity Commission or CIC Regulator if appropriate)
- Governing Document is the company's articles of association
- Can contract and own land or buildings in own name
- Must have Directors or trustees
- Association (wide membership) or Foundation (where directors are the only members) styles are possible
Charitable incorporated organisation (CIO)
- Specifically for charities
- Registered with the Charity Commission only
- Governing document is a Constitution
- Can contract and own land or buildings in own name
- Must have trustees and members
- Association (wide membership) or Foundation (where trustees are the only members) styles available
- May act as trustee of land for another body e.g. local authority
Community Interest Company (CIC)
- Company limited by guarantee or shares
- CIC Regulator
- Community interest test
- Asset lock and dividend cap
- No tax breaks
- Cannot have charitable status
For more information on Community Interest Companies click here
Community Benefit Society
- Registered with FCA (as Mutuals Registrar) not Companies House
- If charitable = “Exempt” charity
- Can contract in own name and own land or buildings
- Directors (trustees) and shareholders / members
- Intended for trading or conduct of a business
For more information on Community Benefits Societies click here
UNINCORPORATED STRUCTURES
Trusts
- May be charitable or non-charitable
- For sport, trusts usually relate to holding land/buildings in conjunction with an Unincorporated Association (‘UA’)
- Governing document is a Trust deed, Conveyance, Long Lease, Will, Charity Commission or Department of Education Scheme
- No members
- Trustees make all decisions (sometimes at direction of UA Committee) and have personal liability
Unincorporated Associations
- May be charitable or non-charitable
- Cannot own land / buildings in own name, so needs land holding trustees
- Governing document is Constitution (and Rules)
- Has members (who usually elect trustees / committee / council / executive)
- Trustees enter into contracts, make day to day management decisions and have personal liability
Social Enterprise
- No consistent legal definition - “Social Enterprise” – neither structure nor real legal status
- No formal registration process (but you can apply for Social Enterprise “mark”)
- Generally accepted must:
- Have social/community benefit purposes
- trade/conduct a business in furtherance of the purposes
- Could also be a charity or CASC
To see an overview of the benefits and conditions of legal structures click here
Clubs that are affiliated directly to the FAW or to the FAW through their Area Association are eligible for a free 1 hour legal consultation per matter raised through the Welsh Sports Association's legal partner.
Contact the helpline on 0300 300 3117 and select Option 5
You may need to quote the following membership number: FAWclub001
GOVERNING DOCUMENT
Once your club's legal status has been agreed and confirmed, you now need to establish a governing document to formalise club decisions and processes to ensure proper and consistent running of your club. This is often called a constitution.
It should include:
- The objectives for your club (e.g. what you want to do or provide for your members)
- The different forms of membership (e.g. adult, junior, social) and perhaps subscription rates
- The rules by which your club will operate -
- How the affairs of the club are to be managed (e.g. by officers and a committee)
- How the members control the club, usually through an annual general meeting.
Constitutions can be lengthy, complex documents, but don’t worry there are plenty of templates to help guide you in the right direction. However, it is important to include the points your club feels are appropriate and relevant and not adopt someone else's document with checking its appropriateness to your club.
For further guidance on constitutions, click here
Sign up now
To get access to the latest FAW Trust news, courses and coaching.
