County cricket clubs were first to be targeted by HMRC enquiry. They have broadly been given a clean bill of health, although questions are still being asked about tax associated with image rights for Test players and there have been problems with the tax position of players’ agents.
HMRC though have denied it is targeting local sports clubs after a Hertfordshire cricket club was sent a tax bill of over £14,000.
Sawbridgeworth Cricket Club, a 151-year-old amateur team with an annual income of around £21,000, received the bill after the Revenue carried out an assessment in 2012.
However, after HMRC agreed a schedule of staged payments and waived penalties, the club was able to settle the bill with money raised from fund-raising events and an interest-free loan.
Community amateur sports clubs are exempt from corporation tax on profits of less than £30,00 a year, but employees such as bar staff are subject to PAYE.
An HMRC spokesperson said the department wasn’t targeting amateur clubs, but non-compliance with the PAYE regime.
“This kind of work is normal. HMRC works to ensure employers are correctly operating the payroll system, so that everyone pays the right amount of tax. We have worked with sports clubs to put things right if necessary,” the spokesman said.
The England & Wales Cricket Board (ECB) has issued guidance notes to clubs, outlining what HMRC wants, urging them to seek advice and warning they could face penalties for failing to meet PAYE and NIC payroll deductions. “Do not accept any HMRC calculations without challenge, but use the results of your review to negotiate with HMRC,” says the ECB.