Coaches and clubs - would YOU pass a tax inspection?
The Tax Authorities (HMRC) are currently undertaking a number of tax inspections into those working and volunteering in sport.
A number of coaches and clubs have been heavily fined as a result - don't let it happen to you!
Here we list the common issues coaches and clubs have had with HMRC. We recommend that anyone working or volunteering in sport urgently review the areas listed for their organisation.
Paying self-employed coaches
Many clubs pay self-employed workers, typically coaches and ground staff.
There are specific rules that must be adhered to when paying self-employed workers - failure to meet these rules can result in the worker being declared an employee by HMRC, resulting in large back tax demands for up to six years worth of tax and NI.
There are also problems in sport where so called self-employed workers are not actually registered, making them automatic employees.
Accurate and Legible Bookkeeping
Coaches and clubs are required to maintain 'accurate and legible' record keeping, i.e. day to day bookkeeping. This has been a particular problem for coaches.
Fines for inadequate bookkeeping can be up to £3,000 per financial year you have been operating, going back a maximum of six years.
Coaches need to maintain records that are detailed enough to identify each and every person/organisation that has paid them.
Payment to casual workers
Payments to workers at your club or coaching programme are potentially liable to tax and NI.
It is a common misconception that you can pay someone for services and tell them that they are responsible for declaring the money paid - it is always the responsibility of the person/organisation paying the money to ensure tax and NI have been correctly deducted.
Clubs have been particularly targeted for this, for example when paying casual workers such as bar staff and cleaners.
Coaches submitting invalid expense claims
A number of coaches have been hit with tax demands because they have claimed for business expenses that are not allowable, such as sports clothing (only uniform is allowable) and travel to their 'principal place of work'.
There is no such thing as allowances when it comes to expenses - you can only claim for actually incurred business expenses.
Payments to Volunteers
HMRC are challenging any payment to volunteers for so called expenses if there is no supporting expenses claim form.
Such payments can turn your volunteer into fully-fledged employees, entitled to employment rights such as holiday pay and to minimum wage.
Any payment that isn't truly for expenses is potentially liable to tax and NI deductions.
Clubs not declaring taxable income
A number of clubs have been fined for not declaring taxable income to HMRC.
Club members should be aware that any form of non-member income is likely to be taxable income, even if the non-member is spending money at a fund-raising event.
Sponsorship income is also taxable income.
Coaches not declaring taxable income
A number of coaches have been fined for not declaring all of their coaching income when HMRC have scrutinised the booking records of the clubs and venues they work at and found that the lessons booked do not match the declared income of the coach.
HOW WE CAN HELP
Places are available for just £45 per person and coaches can benefit from licence points (4 points) for attendance.
Call 01952 201657 to book your place.