Corporation Tax Bill

House of Commons

Session 2009 - 10
Internet Publications
Other Bills before Parliament

Corporation Tax Bill

Corporation Tax Bill
Part 13 — Other special types of company etc
Chapter 9 — Community amateur sports clubs
331

657
Power to make further provision
(1)
The Secretary of State may by statutory instrument make regulations with
respect to England and Scotland for the purpose of carrying out the provisions
of this Chapter.
(2)
A statutory instrument containing regulations made under subsection (1) is
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subject to annulment in pursuance of a resolution of the House of Commons.
(3)
The Welsh Ministers may by statutory instrument make regulations with
respect to Wales for the purpose of carrying out the provisions of this Chapter.
(4)
A statutory instrument containing regulations made under subsection (3) is
subject to annulment in pursuance of a resolution of the National Assembly for
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Wales.
(5)
The Department for Social Development may make regulations with respect to
Northern Ireland for the purpose of carrying out the provisions of this Chapter.
(6)
Regulations made under subsection (5) are a statutory rule for the purposes of
the Statutory Rules (Northern Ireland) Order 1979 (S.I. 1979/1573 (N.I. 12)).
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(7)
A statutory rule containing regulations made under subsection (5) is subject to
negative resolution within the meaning of section 41(6) of the Interpretation
Act (Northern Ireland) 1954 (c. 33 (N.I.)).
Chapter 9
Community amateur sports clubs
20
Basic concepts
658
Meaning of “community amateur sports club” and “registered club”
(1)
A club is entitled to be registered as a community amateur sports club if it is,
and is required by its constitution to be, a club which—
(a)
is open to the whole community (see section 659),
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(b)
is organised on an amateur basis (see section 660), and
(c)
has as its main purpose the provision of facilities for, and the promotion
of participation in, one or more eligible sports (see section 661).
(2)
A club may apply to an officer of Revenue and Customs to be registered as a
community amateur sports club.
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(3)
The officer must register the club as a community amateur sports club if
satisfied that the club is entitled to be registered.
(4)
The officer—
(a)
may register the club with effect from such date as the officer may
specify (which may be before the date of the application), and
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(b)
may cancel the club’s registration with effect from such date as the
officer may specify (which may be before the date of the decision to
cancel it) if no longer satisfied that the club is entitled to be registered.
(5)
Her Majesty’s Revenue and Customs may publish the names and addresses of
registered clubs.
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Corporation Tax Bill
Part 13 — Other special types of company etc
Chapter 9 — Community amateur sports clubs
332

(6)
In this Chapter a “registered club” means a club which is for the time being
registered as a community amateur sports club under this section.
659
Meaning of “open to the whole community”
(1)
A club is “open to the whole community” for the purposes of section 658 if—
(a)
its membership is open to all without discrimination,
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(b)
its facilities are available to members without discrimination, and
(c)
its fees (if any) do not represent a significant obstacle to membership or
use of its facilities.
(2)
For the purposes of this section “discrimination” includes indirect
discrimination and (in particular) includes discrimination on the grounds of—
10
(a)
ethnicity or nationality,
(b)
religion or beliefs,
(c)
sexual orientation, or
(d)
sex, age or disability (except as a necessary consequence of the
requirements of a particular sport).
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(3)
A club is not prevented from being “open to the whole community” for the
purposes of section 658 merely because it has different classes of membership
depending on—
(a)
the age of the member,
(b)
whether the member is a student,
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(c)
whether the member is waged,
(d)
whether the member is a playing member, or
(e)
how far from the club the member lives,

or merely because it has restrictions on the days or times when different classes
of membership have access to its facilities.
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660
Meaning of “organised on an amateur basis”
(1)
A club is “organised on an amateur basis” for the purposes of section 658 if—
(a)
it is non-profit making (see subsections (2) and (3)),
(b)
it provides for members and their guests only the ordinary benefits of
an amateur sports club (see subsections (4) and (5)), and
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(c)
its constitution provides for any net assets on its dissolution to be
applied for approved sporting or charitable purposes (see subsections
(6) and (7)).
(2)
A club is “non-profit making” for the purposes of subsection (1) if its
constitution —
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(a)
requires any surplus income or surplus gains to be reinvested in the
club, and
(b)
does not allow the distribution of any of its assets (in cash or in kind) to
members or third parties.
(3)
A club is not prevented from being “non-profit making” for those purposes
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merely because it makes donations to charities or registered clubs.
(4)
The following are “ordinary benefits of an amateur sports club” for the
purposes of subsection (1)—
(a)
the provision of sporting facilities,

Corporation Tax Bill
Part 13 — Other special types of company etc
Chapter 9 — Community amateur sports clubs
333

(b)
the reasonable provision and maintenance of club-owned sports
equipment,
(c)
the provision of suitably qualified coaches,
(d)
the provision, or reimbursement of the costs, of coaching courses,
(e)
the provision of insurance cover,
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(f)
the provision of medical treatment,
(g)
the reimbursement of reasonable travel expenses incurred by players
and officials travelling to away matches,
(h)
the reasonable provision of post-match refreshments for players and
match officials, and
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(i)
the sale or supply of food or drink as a social benefit which arises
incidentally from the sporting purposes of the club.
(5)
A club is not prevented from providing for members and their guests only the
ordinary benefits of an amateur sports club for the purposes of subsection (1)
merely because—
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(a)
a member supplies goods or services to the club on an arm’s length
basis, or
(b)
the club employs members of the club on an arm’s length basis.
(6)
In relation to any club, the following are “sporting or charitable purposes” for
the purposes of subsection (1)—
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(a)
the purposes of the governing body of an eligible sport for the purposes
of which the club existed, for use in related community sport,
(b)
the purposes of another registered club, and
(c)
the purposes of a charity.
(7)
Purposes of a club are “approved” sporting or charitable purposes for the
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purposes of subsection (1) if they are approved by—
(a)
the members of the club in general meeting, or
(b)
the members of the club’s governing body.
661
Meaning of “eligible sport”, “qualifying purposes” etc
(1)
For the purposes of this Chapter “eligible sport” means a sport which is
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designated for those purposes by an order made by the Treasury.
(2)
An order under this section may designate a sport by reference to its inclusion
in a list maintained by a body specified in the order.
(3)
For the purposes of this Chapter “qualifying purposes” means—
(a)
the purpose of providing facilities for one or more eligible sports, and
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(b)
the purpose of promoting participation in one or more eligible sports.
(4)
For the purposes of this Chapter “non-qualifying purposes” means purposes
which are not qualifying purposes.
(5)
For the purposes of this Chapter “non-qualifying expenditure” means
expenditure which is incurred for non-qualifying purposes.
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Corporation Tax Bill
Part 13 — Other special types of company etc
Chapter 9 — Community amateur sports clubs
334

Exemptions
662
Exemption for UK trading income
(1)
A club which is a registered club throughout an accounting period may make
a claim for its UK trading income for that period to be exempt from corporation
tax if conditions A and B are met.
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(2)
Condition A is that the receipts which would (but for this section) be brought
into account in calculating the club’s UK trading income for that period do not
exceed the relevant threshold.
(3)
Condition B is that the whole of its UK trading income for that period is applied
for qualifying purposes.
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(4)
If a club is a registered club for only part of an accounting period, this section
has effect as if—
(a)
that part were a separate accounting period, and
(b)
the club’s UK trading income and receipts for that separate accounting
period were proportionately reduced.
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(5)
In this section “the relevant threshold” means—
(a)
£30,000 in the case of an accounting period which is 12 months, and
(b)
a proportionately reduced figure in the case of a shorter accounting
period.
(6)
In this section “UK trading income” means profits that (apart from this section)
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are chargeable under Chapter 2 of Part 3 of CTA 2009 and are—
(a)
profits of a trade carried on wholly or partly in the United Kingdom, or
(b)
profits of an activity other than a trade.
663
Exemption for UK property income
(1)
A club which is a registered club throughout an accounting period may make
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a claim for its UK property income for that period to be exempt from
corporation tax if conditions A and B are met.
(2)
Condition A is that the receipts which would (but for this section) be brought
into account in calculating the club’s UK property income for that period do
not exceed the relevant threshold.
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(3)
Condition B is that the whole of its UK property income for that period is
applied for qualifying purposes.
(4)
If a club is a registered club for only part of an accounting period, this section
has effect as if—
(a)
that part were a separate accounting period, and
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(b)
the club’s UK property income and receipts for that separate
accounting period were proportionately reduced.
(5)
In this section “the relevant threshold” means—
(a)
£20,000 in the case of an accounting period which is 12 months, and
(b)
a proportionately reduced figure in the case of a shorter accounting
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period.

Corporation Tax Bill
Part 13 — Other special types of company etc
Chapter 9 — Community amateur sports clubs
335

(6)
In this section “UK property income” means income of a UK property business
which would (but for this section) be chargeable under Chapter 3 of Part 4 of
CTA 2009.
664
Exemption for interest and gift aid income
(1)
A club which is a registered club throughout an accounting period may make
5
a claim for—
(a)
its interest income for that period, and
(b)
its gift aid income for that period,

to be exempt from corporation tax if the whole of that interest income and gift
aid income is applied for qualifying purposes.
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(2)
If a club is a registered club for only part of an accounting period, this section
has effect as if—
(a)
that part were a separate accounting period, and
(b)
the club’s interest income for that separate accounting period were
proportionately reduced.
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(3)
In this section—
“interest income”, in relation to a club, means interest arising to the club
that is not brought into account under section 297 of CTA 2009 (trading
credits and debits brought into account under Part 3 of that Act as
trading income), and
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“gift aid income”, in relation to a club, means gifts made by individuals to
the club which are qualifying donations for the purposes of Chapter 2
of Part 8 of ITA 2007 (gift aid).
665
Exemption for chargeable gains
A registered club to which a gain accrues may make a claim for the gain not to
25
be a chargeable gain for the purposes of TCGA 1992 if the whole of it is applied
for qualifying purposes.
Restrictions on exemptions
666
Exemptions reduced if non-qualifying expenditure incurred
(1)
This section applies if—
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(a)
a registered club has relevant income or relevant gains for an
accounting period (“the accounting period in question”), and
(b)
the club incurs non-qualifying expenditure in that period.
(2)
For the purposes of this section—
“relevant income”, in relation to an accounting period, means income
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which is exempt under this Chapter for that period (ignoring the effect
of the following provisions of this section),
“relevant gains”, in relation to an accounting period, means gains which
are not chargeable gains under this Chapter for the purposes of TCGA
1992 for that period (ignoring the effect of the following provisions of
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this section), and
“income receipts and chargeable gains”, in relation to an accounting
period, means the sum of the club’s income receipts for that period

Corporation Tax Bill
Part 13 — Other special types of company etc
Chapter 9 — Community amateur sports clubs
336

(whether or not chargeable to tax) and its chargeable gains for the
purposes of TCGA 1992 for that period (ignoring the effect of section
665).
(3)
If the amount of the non-qualifying expenditure in the accounting period in
question is less than the amount of the income receipts and chargeable gains
5
for that period, there is a reduction in the amount of relief given under this
Chapter.
(4)
The total amount of the relevant income and relevant gains for that period
exempted under this Chapter is reduced by the amount found by the
appropriate fraction.
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(5)
This is the appropriate fraction—


where—
“RIRG” means the total amount of the relevant income and relevant gains
for that period,
“NQE” means the amount of the non-qualifying expenditure in that
15
period, and
“IRCG” means the income receipts and chargeable gains for that period.
(6)
If the amount of the non-qualifying expenditure in the accounting period in
question is at least equal to the amount of the income receipts and chargeable
gains for that period, the exemptions under this Chapter—
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(a)
do not apply, and
(b)
are treated as never having applied,

to any of the relevant income or relevant gains for that period.
(7)
If the amount of the non-qualifying expenditure in the accounting period in
question is greater than the amount of the income receipts and chargeable
25
gains for that period, there is a reduction in the amount of relief given under
this Chapter for previous accounting periods.
(8)
The total amount of the relevant income and relevant gains for previous
accounting periods exempted under this Chapter is reduced (but not below nil)
by the surplus amount.
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(9)
The surplus amount is the amount by which the amount found by the
appropriate fraction exceeds the total amount of the relevant income and
relevant gains for the accounting period in question.
667
Rules for attributing surplus amount to earlier periods etc
(1)
This section supplements section 666.
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(2)
An amount exempted under this Chapter for an earlier accounting period is
reduced by the surplus amount only if that earlier accounting period ends not
more than 6 years before the end of the accounting period in question.
(3)
If the condition in subsection (2) is met in the case of more than one earlier
accounting period, amounts exempted under this Chapter for later accounting
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periods are reduced in priority to earlier ones.

Corporation Tax Bill
Part 13 — Other special types of company etc
Chapter 9 — Community amateur sports clubs
337

(4)
If an amount exempted under this Chapter has been reduced under section 666
in respect of non-qualifying expenditure incurred in an accounting period, it
may not be reduced again under that section in respect of non-qualifying
expenditure incurred in a later accounting period.
(5)
Such adjustments must be made (whether by way of the making of
5
assessments or otherwise) as may be required in consequence of section 666(7).
668
How income and gains are attributed
(1)
A registered club may specify the income and gains to be reduced (in whole or
in part) as a result of section 666.
(2)
A specification under subsection (1) is made by notice to an officer of Revenue
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and Customs.
(3)
Subsection (5) applies if—
(a)
an officer of Revenue and Customs requires the club to make a
specification under this section, and
(b)
the club has not given notice under subsection (2) of the specification
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before the end of the required period.
(4)
The required period is 30 days beginning with the day on which the officer
made the requirement.
(5)
An officer of Revenue and Customs may determine the income and gains to be
reduced (in whole or in part).
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Deemed disposal and acquisition of asset
669
Asset ceasing to be held for qualifying purposes etc
(1)
This section applies if a club holds any asset (within the meaning of TCGA
1992) and, without disposing of it (within the meaning of that Act)—
(a)
the club ceases to be a registered club, or
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(b)
the club ceases to hold the asset for qualifying purposes.
(2)
The club is treated for the purposes of TCGA 1992 as disposing of, and
immediately reacquiring, the asset at the time of the cessation for a
consideration equal to its market value at that time.
(3)
The exemption under section 665 does not apply to any gain accruing on that
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deemed disposal.
(4)
So far as any of the asset represents (directly or indirectly) the consideration for
a disposal of any other asset by the club, the exemption under that section does
not apply, and is treated as never having applied, to any gain accruing on that
disposal of that other asset.
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(5)
Such adjustments must be made (whether by way of the making of
assessments or otherwise) as may be required in consequence of this section.
(6)
But an assessment in respect of a chargeable gain accruing as a result of this
section may not be made more than 3 years after the end of the accounting
period in which the cessation in question occurred.
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