Sport pleads for tax breaks to avoid bankruptcies

The government was yesterday urged to introduce tax exemptions for thousands of British sports clubs to prevent them from going bankrupt.

As many as 40,000 of the country's 110,000 voluntary sports clubs could go out of business in the next few years if they do not get exemption from VAT and local rates, according to officials from the country's leading sports.

Some also have to pay duty on bars and gambling machines they run in club houses and also tax on tickets sold for certain fundraising events. This money, campaigners claim, should be used for the development of sport and young athletes.

A delegation representing football, rugby, cricket and tennis met Paul Boateng, financial secretary to the Treasury, as part of the campaign.

There is widespread anger within the sports community that the government has back tracked on a promise made in January 2001 that tax exemptions would be introduced. Following publication of a consultation paper last year, the government recommended that sports clubs should register as charities to receive exemptions.

The clubs reject this as unworkable because of the cost and administration involved in gaining charitable status. The delegation that met Mr Boateng was made up of the Football Association, the Rugby Football Union, the England and Wales Cricket Board, the Lawn Tennis Association, and the Central Council for Physical Recreation .

Officials said they were encouraged by the meeting but had received no firm assurances. "We had a very productive meeting with Mr Boateng, who showed great understanding of the vital role of voluntary sports clubs," said John Read, director of corporate affairs at the ECB.

"However, it is essential to have joined up thinking on this issue. The Department for Transport, Local Government and the Regions must be persuaded to introduce 80% rate relief for all clubs."

Sports officials claim registering as a charity is cumbersome, bureaucratic and costly, and that most voluntary sports clubs do not have the time or money to do it.

Charity status would also mean that sports clubs would fall under the governance of the charity commission and lose some of their independence while others would have problems running profit generating ventures.

Nigel Hook of the CCPR said: "The idea of sports clubs registering as charities caught us by surprise. It had not even been considered until the government's consultation paper was produced. It can cost anything up to £3,000 to register as a charity and sports clubs do not have this money."

A survey conducted by the CCPR last month found that 34% of voluntary sports clubs described their finances as precarious. Overall, the number of voluntary sports clubs has decreased from 150,000 in 1996 to 110,000.

The CCPR survey found 68% of sports clubs claimed the amount of red tape they faced had increased while 38% said membership had decreased.

Sports officials are hoping the government will have a change of heart and introduce tax exemptions in the budget on April 17. More than 100 MPs have signed an early day motion supporting this position. Campaigners are hoping for the implementation of a simple system of tax exemption.

Mr Hook said: "We want simple tax breaks. It should just require filling out a form, sending in the accounts and then getting approval that you are a voluntary sports club entitled to tax exemptions. This is the system that we were promised."