Sport sector falls foul at chancellor

Demands for tax relief on grass roots investment in sport are set to fall on
deaf ears at the Treasury, Accountancy Age understands.

The chancellor is likely to resist demands for relief on the investments, on
the basis that sporting organisations are already well-supported enough.
RFU finance director
Nick Eastwood has been lobbying the Treasury to offer the relief.

Cash surpluses that the body earns are always pumped back into investment in
grass roots, Eastwood said. He believed that such ‘profits’ should not be taxed
since they are reinvested in worthy causes.

The RFU’s investment in rugby programmes totals £20m.

Whitehall insiders this week confirmed discussions were taking place with
rugby union representatives, but said it was unlikely the concession would be
The Treasury declined to comment formally on the negotiations, saying only that
it talked to a lot of people on related issues on an ongoing basis.

Eastwood revealed the talks in an interview published in Accountancy
two weeks ago.

Asked about the tax issues he faced, he replied: ‘How long have you got? We
have got major tax issues-we are significantly disadvantaged under the current
tax rules.
‘It’s an absolutely crazy situation to be in. The main reason is that there’s no
special framework for tax in sport, the business framework is used to tax us.

‘If we had a £10m surplus from our operational activities and invested the whole
amount in the grass roots we’d have a £3m tax charge because those £10m are not
deemed to be for the purposes of trade. Our bulk profits would be zero and our
tax profits would be £10m. It’s like trying to bash a square peg into a round
hole and it doesn’t fit.’

‘Sports governing bodies are completely different animals. It’s a constant
battle. We are engaged in dialogue but, like anything in government it takes a
long time for the wheels to turn,’ Eastwood added.

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