This is the time of year that most clubs start to plan their summer programme of coaching and club activities and it is therefore a perfect time to ensure that any self-employed coaches you use in delivering your programme are truly self-employed, i.e. they would pass scrutiny by HMRC (tax authorities) should they decide to investigate your club.
It is important to understand that a club cannot just declare that they are in a self-employment relationship with a coach. A club would have to prove to the tax authorities that the manner in which they work with the coach is genuinely a self-employment relationship, and not one of disguised employment, i.e. the manner in which the club works with the coach is actually one of employment/worker.
If HMRC find that the manner in which a club is working with a self-employed coach is actually one of disguised employment, they will declare the relationship to be one of employment/worker and pursue the club for owed employers national insurance contributions, interest and penalties, dating from when the coach started at the club.
There are three ways that a club can work with a self-employed coach to ensure they would pass inspection by HMRC. Each will require a contract of services to be in place between the club and the coach outlining the actual working arrangements.
You should ensure that you have a contract with the self-employed worker that states that they will only be paid on submission of a detailed invoice and the contract should also state that the self-employed worker will only be paid if the work delivered is to the satisfaction of the client (the organisation paying the worker).
You should also ensure that you are actually given a valid invoice by the worker and not just a timesheet. So what should a valid invoice consist of?
Volunteers CAN be reimbursed for travel between their home and the club they are volunteering at, unlike employees or self-employed workers who cannot claim for travel between home and their ‘principal place of work’.
It is important to ensure that reimbursement is only given when the volunteer completes a claim form and lists the mileage being claimed for by journey, i.e. from postcode, to postcode, reason for travel, number of miles, and the mileage rate agreed.
You do not need petrol receipts for reimbursing such mileage (you only need petrol receipts if the club is VAT registered, in which case, the club may be able to claim some of the VAT paid by the volunteer).
Twitter is a great social media platform for reaching new customers and informing current customers of what is going on at your club. There are over 310 million active monthly users on Twitter worldwide.
Embedding your Twitter feed into your website can be a great way of promoting your account and an easy way of keeping your site updated with fresh content.
You have one calendar month to register for VAT if your ‘vatable’ income from services you have provided for the previous 12 months has exceeded the VAT threshold limit (currently £82,000 as at July 2015).
Your ‘vatable’ income is the income from services you provide that is subject to standard, reduced or zero rated VAT. You do not include any services that are exempt from VAT or that are outside the scope of VAT in the income calculation. What income should and shouldn’t be included will depend on your legal status, e.g. a not for profit club’s membership income is exempt from VAT and therefore would not be included in the ‘vatable’ income calculation.
It is quite common for a club to reward their volunteer coach by providing free lessons for their children in the club programme.
Clubs should note that the tax authorities will consider this to be the same as paying the coach the market value of the lessons for their coaching services. One club we visited recently was providing free lessons to a coach for her three children with a market value of £3,400 (the amount the coach would have had to pay if she had been a member) as a ‘thank you’ for her volunteer coaching.
We regularly visit clubs where they are relying on substitution as the way in which their coach is truly self-employed with them, but where the coach has never actually substituted.
It is important to note that a coach who has never actually substituted may not actually pass HMRC scrutiny for self-employment status – HMRC would expect to see evidence that the coach HAS substituted in the past and that subsequent payment to the substitute coach was made by the coach and not the client (club).
This will depend on the status of the coach – are they employed or self-employed? Clubs in particular should be very careful about issuing disciplinary proceedings against a self-employed coach – this action could suggest that the coach is actually an employee rather than a self-employed worker.
We are often asked this question by clubs and coaching agencies who have usually been told by someone that a TRULY self-employed person must have ‘multiple’ clients.
The good news is that a self-employed worker CAN be TRULY self-employed and work for just one client/club/agency, so long as they are passing the self-employment guidelines.
A sports club can indeed choose to incorporate as a limited company by shares but it is not advisable for a club that is not for profit.
A club that is not for profit will need to demonstrate to potential funding organisations and to the tax authorities that any profit/surplus it makes is NOT distributed to the members of the club but is instead reinvested back into the club. This would be contrary to the structure of a company limited by shares, where the shareholders would normally be paid a dividend based on the financial performance of the company.