Protecting Your Club Against HMR&C Inspection Name Role

Background HMR&C announced in 2011 would be investigating “instructors and tutors” This has resulted in a number of inspections of sports clubs: Aspect Normally a telephone call Looks into specific “aspects” of the club’s activities Dependent on outcome can lead to full investigation. Full Visit to club – normally Executive and Head Coach Review financial records for current and previous year.

Inspections - Main Issues Arising Poor bookkeeping records No receipts No formal accounts No historic records Current year plus 6 Claiming incorrect expenses Honorarium Payments Failing Self-employment guidelines

Good Bookkeeping Keep detailed list of all items of income and Expenditure Date, Value, Reason and Who Keep receipts for all expenditure Organised filing system and cross reference to expenditure list. Retain copies of all contracts Ensure all computer files are backed up

Paying Expenses for Volunteers Wholly and Exclusively for Club Activities Exclude any personal use Ensure expense relates to valid club activities Must be supported by receipts and only cover actual costs incurred by the volunteer. Do not pay Honorariums (payments not directly linked to volunteers costs on behalf of club are subject to tax) Mileage allowance is allowed up to 45p per mile SASA and East District rate currently 35p per mile Do not pay for mobile phone costs unless phone is used exclusively for club business *Do not distribute list of duties for volunteers as this could constitute a “job description”. Retain them at committee level

Self-Employment Guidelines The Basics Ensure all individuals receiving payments in addition to expenses are registered self-employed with HMR&C Keep copy of certificate with accounting records Create a formal contract between club and individuals Define duties Payment rates (training, competitions etc) Not standard fee per month Expenses to be covered by club (hotels and travel for competitions) Ensure individual submits invoices for services

Self-Employment Guidelines Avoid Implied Employment 3 ways to pass guidelines – only need to fulfil one of them to pass Financial Risk Individual provides all equipment to carry out work Individual pays reasonable fee for facilities they use Individual submits invoice for hours worked Individual is responsible to put right any work deemed unsatisfactory Control of Work Individual decides on when, where and how they carry out their work. Substitution Club allows and requires the individual to provide a substitute if he/she cannot fulfil their duties Ensure substitution actually happens occasionally Club must pay contracted individual for this work and he/she pays the substitute. Test you meet guidelines by visiting HMR&C’s Employment Status Indicator software at www.hmrc.gov.uk/calcs/esi

Self-Employment Guidelines Consequences of Failure to Meet Guidelines Club not individual responsible for meeting guidelines Individual deemed to be an employee Club responsible for PAYE and NI for individual Payment to individual will be deemed to have been net of PAYE and NI. For every £100 paid club could be liable for c. £30. Could be more if individual has another employment HMR&C can go back for as long as individual has been involved with club up to 20 years HMR&C will make assessment of past income of individual based on current situation Interest on past assessment will be charged Penalties could be levied Criminal charges brought if deemed deliberate abuse of rules Club (members collectively) could face charges under employment legislation for not meeting minimum wage levels.

Next Steps Do: Ensure accounting records are robust If not start now, credit given for willingness to improveEnsure only valid expenses supported by receipts given to volunteers Ensure all individuals paid sums in excess of expenses are registered self-employed and have formal contract with club Ensure individuals submit invoices for services provided Ensure 1 of the 3 ways to pass self-employment guidelines are met to avoid “implied” employment (visit www.hmrc.gov.uk/calcs/esi) Don’t: Assume HMR&C will never investigate your club Pay honorariums Contact HMR&C to seek advice on the topic as this will raise concerns with them and is likely to increase the possibility of an investigation.

Responses to an “aspect” investigation by HMR&C All our paid individuals are registered self-employed with HMR&C We have written contracts in place with each of the individuals We fulfil the requirement of the Employment Status Indicator by virtue that the individuals have written into the contracts that they must provide a substitute individual who is suitably qualified to fulfil their duties in the result of their absence and this has indeed been the case on a number of occasions. The degree of knowledge shown in that response will give the HMR&C a degree of confidence that you as a club know the rules, and are applying them properly and greatly reduce the chance of a full investigation