The Covid lockdown has made many rugby clubs financially vulnerable, and depending upon each club’s specific circumstance and structure, has the potential to impose significant risks and financial liability on both clubs and their officers, including at a personal level. This is especially true for clubs that are unincorporated.
A recent ‘webinar’ arranged by kentsport.org and hosted by Rix & Kay Solicitors, considered the pros and cons of sports clubs being incorporated, including describing how incorporation can mitigate against personal liability. The decision as to whether a rugby club should incorporate is one that the RFU has for some time encouraged all clubs to consider and to review regularly, ideally each year in the light of prevailing circumstances and the external environment.
Of course, while incorporation offers a club protection, not least by being a distinct and separate legal entity to those individuals who run it, the nature of incorporation also imposes varying degrees of regulatory burden and compliance with statutory regulation. This can stretch resources and is something, therefore, that clubs should consider carefully on when reviewing their legal status.
Which type of company should you choose?
Incorporation of a sports club typically takes one of three forms. The level of regulation increases with each – as do the tax implications (but that is for another time).
A CASC allows local amateur sports clubs to register with HMRC and benefit from a range of tax reliefs, including Gift Aid, where they meet the qualifying conditions. It must be a company limited by guarantee; while a charity may be either a company limited by guarantee or a CIO. The process of incorporation will involve any or all of Companies House, the Charity Commission and HM Revenue & Customs.
What are the pros & cons of each?
The RFU has arranged helplines through its partner, Irwin Mitchell, for clubs to obtain free advice on any legal or tax related matter, as well as online support for the creation of standard employment agreements and legal documents. Legal & Tax Helpline: 0333 0100337
Disclaimer: This article is for general information only. It does not constitute legal advice, nor does it provide an exhaustive list of the pros & cons of incorporation. Its content should not be presumed to be legally accurate. For clubs wishing to consider incorporation, the KCRFU strongly advises that they seek formal legal advice.