Peter Anthony Simpson and others as Trustees of the East Berkshire Sports Foundation v Her Majesty's Revenue & Customs, SPC 00732

Spc00732

Income Tax - Donations to charity - Assessment made to recover income tax initially refunded, the recovery based on the claim that donations to an alleged charity had not ranked as qualifying donations under section 25 Finance Act 1990 - whether the alleged donations took the form of “a payment of a sum of money” – whether the recipient of the donations was a charity - Appeal dismissed

PETER ANTHONY SIMPSON and others as

TRUSTEES OF THE EAST BERKSHIRE SPORTS FOUNDATION Appellants

• and –

Special Commissioner: HOWARD M NOWLAN

Sitting in public in London on 15 December 2008

Mr Peter Simpson, solicitor, in person on behalf of himself and the other trustees

Mr Akash Newbatt, counsel, for the Respondents

© CROWN COPYRIGHT 2009

1. This was a very difficult case. It was difficult in the sense that it raised a number of difficult factual and legal questions. It left me agonising over how to arrive at the correct answer, and somewhat mindful that I would have welcomed more guidance in relation to charity law to assist me in arriving at that decision. The numerous difficult legal questions also left me bewildered at the battle that the Appellant had had to wage in order to persuade the Respondents to consent to the case being heard by a Special Commissioner rather than by the General Commissioners. The case was also difficult in the other sense. In other words, having very reluctantly decided that I must dismiss this appeal, I have to say that I cannot help but applaud the public-spirited generosity of the Appellants who have between them donated over £123,000 to save and improve their local amateur football club, for no personal benefit whatsoever, and in a way which, at the very least, bordered on having been effected by way of the payment of a charitable donation.

2. Peter Simpson, a solicitor and partner in the firm of Lovegroves LLP, presented the case personally and on behalf of the other former trustees of the East Berkshire Sports Foundation (“the EBSF”), namely Kevin Stott and Abbas Shams. He alone gave evidence, and no witnesses were called by the Respondents.

3. The three Appellants were strong supporters of their local East Berkshire football club, namely Windsor & Eton Football Club. This club was formed in 1892, and has occupied its present ground since 1911. Since 1994 the club has been operated by, and the lease of its ground held by, Windsor & Eton Football Club (Holdings) Limited (the club and the company both being referred to below as “the Club”), a company limited by guarantee. As a company limited by guarantee, the Club reinvested any profits in its business, having no shareholders to whom to distribute profit. In the event of there being any surplus on the winding up of the Club, the surplus was to be distributed in the familiar manner for guarantee companies, in other words to other similar clubs, institutions or charities as selected by the guarantor members or the Football Association.

4. The Club has suffered a rather poor period in his history in that its main team has fallen a couple of Leagues. It had competed in the Suburban Football League, and later in the League now known as the Ryman League. For the last three seasons the Club has competed in the South Western Division of the Southern Football League. As well as the team having been relegated to this League which Mr. Simpson described as “the bottom of the pyramid” of League football, the Club had other problems which even threatened its survival, in that its pitch was in poor repair, suffering drainage problems, and all its other facilities (the changing facilities and the concrete structure of its small stand) were all run down, and somewhat dangerous. Some of the damage to the pitch was caused by over-use in that the Club operated not only its first team, but a second team and a youth team, and when Slough football club were without a ground for a period, the Club permitted Slough to use the Club’s ground. In addition a considerable number of finals of other minor amateur competitions are held at the Club’s ground. Coupling all this usage with coaching for anyone who wanted to participate in the coaching, and fundamental problems associated with the clay sub-soil meant that a great deal of work needed to be done, and a significant amount of money needed to be spent.

5. Prior to considering the required work, and the way in which the work was financed and done, I need first to comment on the status of the First Team and the question of whether it was an amateur, semi-professional, or professional team. I was told that in the clubs competing in Leagues 5 and 6 (two and three levels about the Club itself) players could be either professional footballers or part-time players retaining other full-time employment outside football. At the Club’s level, I was told that all players were either full-time students or were full-time workers engaged in other activities. The players in the Club’s First team were paid roughly £100 a week, by way of expense allowance to cover the costs of the players driving to the Club twice a week for training sessions (some a considerable distance), and then driving to home and, more significantly, to away fixtures.

6. Others using the club premises and pitch were invariably amateurs, or indeed just any members of the public who might wish to participate in football coaching.

7. The project of improving the Club’s pitch, its mini training pitch and its premises would not have been achieved but for the keenness and initiative of the three Appellants. They not only inspired a number of people to give voluntary labour, and persuaded traders to supply materials at a discount, but they managed to secure a few grants, and most significantly between them, they provided in excess of £123,000. Mr. Simpson himself became Chairman of the Club, and I did not remotely doubt his remark when he said that but for these efforts and this expenditure, the Club would probably have ceased to exist. Its demise would clearly have been a loss to the community because some at least of its facilities could be used by the public generally, rather than just being dedicated to the use of the First team or the three teams together, and so they provided the local community with some sports facilities, there apparently being few other similar grounds or facilities in the area.

8. The way in which the three Appellants financed the expenditure was slightly complicated and indeed there are factual disputes as to several points. One clear point is that when materials were supplied or chargeable work was charged for by a contractor, the Appellants individually paid the suppliers or contractors directly. I was shown countless invoices from builders’ merchants, which regularly invoiced one of the individuals, and of course indicated that the delivery address for the materials was the Club’s premises. In the case of materials paid for directly by Mr. Simpson, I was shown a Schedule, which listed 27 items of expenditure, paid between 25 November and 25 January 2002, with each item being labelled in the...