Football fans score own goal
Three supporters of Windsor & Eton Football Club made contributions to the club (between them) over £120,000...
The money was used for improvements to its pitch and premises. The club was not a charity, although it did allow use of its pitch and premises by amateur footballers.
The individuals then sought to obtain tax relief on the contributions that had been made. This was done by setting up an ostensibly charitable trust, the East Berkshire Sports Foundation, by treating the contributions to the club as loans rather than outright payments, and by assigning the benefit of the loans to the foundation. The club and the foundation then swapped cheques for £50,000. The club’s cheque supposedly represented a payment of part of the debt due to the foundation, whereas the foundation’s cheque was presented as a charitable grant to the club, to be used for the provision of communal recreational facilities. The balance of the debt due to the foundation was satisfied by set-off, so that no further cheques changed hands.
The supporters then claimed that the Gift Aid scheme applied to their contributions. This claim failed on two main grounds. The first was that the foundation was found not to be a charity, as it was established to function as a conduit for payments to the club (nor was it a registered community amateur sports club). The second was that, with the possible exception of the £50,000 referred to above, the formal conditions for the Gift Aid scheme weren’t met. This is because the scheme requires a payment of a sum of money by the donor; a set-off of debts doesn’t qualify. Interestingly, HMRC conceded that, if the foundation was a charity, Gift Aid would apply to the £50,000 cheque payment made to the foundation – notwithstanding that the payment was made by a person other than the taxpayer.
According to Dominic Lawrance (Macfarlanes LLP), the finding that the foundation was not a charity is questionable. However, an appeal seems unlikely. The decision highlights the importance of attention to detail whenever tax is involved. In this case, the documentation was described by the judge as ‘a mess’. If more thought had gone into the paperwork, the match could have gone the other way.
Author: Clarissa Dann
Clarissa Dann was the editor of Caritas as well as an HR and management online service,he People Bulletin until July 2011.
She is now the editor of the specialist trade finance magazine, Trade and Forfaiting Review which can be viewed at www.tfreview.com but does write on charity finance and investment from time to time.
Clarissa has a background in legal and professional publishing, as well as business journalism and holds an MBA from
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