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Last update: Wednesday May 7, 2008 9:33
Under new legislation chess organisations, e.g. chess clubs, may now qualify for charitable status. A number of advantages flow from charitable status. Charities are in a favourable position to attract donations, and they receive tax repayments on donations under the Gift Aid provisions. Charities are also exempt from direct tax for most purposes, qualify for local authority rates relief and receive limited VAT advantages. The Charity Commission has issued guidance on applications for charitable status: www.charity-commission.gov.uk. Applicants should have regard to this guidance. This note elaborates on certain issues relevant to chess organisations applying for charitable status.
A charity is an organisation which has a charitable purpose and is for the public benefit. With effect from April 2008, chess organisations may qualify for charitable status in accordance with new charities legislation, Charities Act 2006. This Act extends the scope of charitable purposes to include the advancement of amateur sport.
Sport is defined in the Act as ‘sports or games which promote health by involving physical or mental skill or exertion’. In Parliamentary debate, the Government recognised that chess satisfied this definition and it is anticipated that the Charity Commission will adopt this position.
This requires that:-
(i) there must be an identifiable benefit or benefits; and
(ii) the benefit must be to the public, or a section of the public.
The Commission has issued general guidance notes on the public benefit requirement, and is expected to issue detailed guidance relating to sporting organisations. It is anticipated that chess organisations will qualify for charitable status provided that they meet the public benefit requirements. This means amongst other things that the membership criteria of chess clubs should be sufficiently open to satisfy the 'section of the public' requirement'.
Most charities must register with the Charity Commission. However, small charitable organisations i.e. with an annual income of less than £5,000 have charitable status and enjoy the benefits of this status without having to register with the Charity Commission. Many chess organisations may be in this position.
Such organisations should apply directly to the Revenue and Customs (HMRC) for charitable tax status: www.hmrc.gov.uk/charities.
In the context of applying to HMRC or for registration with the Charity Commission an organisation will need to have a suitable governing document. This is a rule book for the way in which the charity will operate. Guidance is provided in the Charity Commission’s publication 'Choosing and Preparing a Governing Document'.
A governing document is an organisation’s constitution, the formal document which sets up a charity. It should contain information about:
Model governing documents can be found on the Charity Commission’s website.
The Charity Commission has issued a Registration Application Pack, to help organisations looking to apply for registration. It contains an application form, a trustee declaration form, guidance notes and a copy of the Commission’s advice on the responsibilities of trustees.
The Federation welcomes the Charities Act 2006. The Charity Commission helps organisations applying for charitable status, and the ECF is happy to give such help as it can. Organisations who want definitive advice before applying to the Commission must of course take professional advice themselves: this note does not of course constitute formal legal or tax advice.
The Federation understand that certain chess clubs are looking shortly to submit applications for charitable status, and is conferring with these clubs. This note will be revised in light of useful experience gained from such applications. If you come across difficulties of general application which could usefully be raised by the Federation on a representative level, please contact Cynthia Gurney at the Federation.
David Anderton/Richard Fries/Melville Rodrigues/William Watson
May 2008