I’m on the committee if a running club, we have circa 250 members, all adults, that has grown steadily for the last 20+ years.
We currently have a fair amount of money in our bank account, £25k ish. This has come from membership fees and profit from an annual race we run and has been accumulated over around 25 years. Our accounts are audited every year by an accountant. We currently spend the money on race entries, venue hire, the odd bit of kit, usual stuff for a club. The amount in the account increase year on year, but not by much.
The question is that no-one is quite sure what status/type of organisation we are operating as, and therefore, what we can spend the money on. It also prompts questions on if we have a tax liability.
We’re not a charity and we’re not a limited company, we’ve never registered as anything, and have just kind of “existed”.
Any idea on where to start on unraveling this, working out what we are, and how to work out any tax liabilities? We’re suprised our accountant hasn’t picked anything up, but there may be reasons for this.
You are an unincorporated association and as you are making a profit you are likely to be liable to corporation tax. Probably worth looking at becoming a Community Amateur Sports Club, which may well resolve the issue for the future and is less onerous that becoming a charity.
Worth speaking to the accountant/auditor to confirm, but if you aren't making profits, and it's being re-invested in the club you should be fine. Sounds like the balance build up is over many years.
It's much like how local Scout groups etc are run. There is quite a bit of guidance on HMRC's web site. I've looked at it before for a 'society' and it was OK for tax status. You are at least getting the accounts audited.
Do get professional advice as HMRC don't accept 'we assumed' as an excuse.
Worth speaking to the accountant/auditor to confirm, but if you aren’t making profits
But they are on a race, probably involving non-members which is why a tax issue may arise (interest income will also cause a problem)
You are most likely an unincorporated association and there are lots of interpretations as to what that may mean. What does the Club's constitution say (if you have one) about surpluses? That will answer many of the questions. The law might treat the officials of the club (committee members) as constructive trustees holding the funds on behalf of the members or it might decide that you are a body corporate and you could be liable to corporation tax on profits as mentioned above.
The one thing that you do need is an accountant to help you out.
Have you asked the accountant if they can provide tax advice?
Are any of the members - or any of their family members - tax accountants and, if so, can they advise and provide guidance?