"SavetheUKCC" petition

[Mike Truran]

I just love the absolutely resolute way in which the Sage of Bourne End will ignore each and every post in which someone has caught him out in a falsehood/misrepresentation of history/unwarranted innuendo/unwarranted accusation etc.

As they say, Roger, "never apologise, never explain".

[Roger de Coverly]

It's worth reminding ambitious ECF directors every so often that a "more involved" ECF does impose a possible VAT risk on local organisations. If the ECF had tried to run e2e4 style weekend competitions, it would have been up to 20% more expensive than a VAT-free smaller operation.

It was recently leaked that the ECF had an internal row about how to fill the gap left last year by the suspension of e2e4 tournaments. It was claimed that at least one director wanted the replacement tournaments branded as ECF.

[Johan Rydahl]

Because we fundamentally disagree with tax evasion?

I hope that everyone disagrees with tax evasion. Sorry I think I failed in getting my point across. The petition is about why chess is treated differently from sports. Let's say UKCC wasn't about chess but darts or any other activity HMRC classifies as a sport. Mr Basman's tax situation would probably be very different. Maybe he even would be government funded.

Now you can say: "But the law is the law" and I would agree. However the question is if it fair that chess is discriminated against. Why not just add chess to the list of activities exempt from VAT.

[Roger de Coverly]

Why not just add chess to the list of activities exempt from VAT.

For whatever reason, those who have the decision making powers on this are extremely set against it. I suppose they fear that exempting chess would open up demands for the exemption to extend to all card and board games.

The English Bridge Union tried and failed recently to get an exemption for Bridge and by extension, other mind sports.

http://www.accountingweb.co.uk/tax/hmrc ... ot-a-sport

[Mike Truran]

It was recently leaked that the ECF had an internal row about how to fill the gap left last year by the suspension of e2e4 tournaments. It was claimed that at least one director wanted the replacement tournaments branded as ECF.

Not on my watch.

Chapter and verse please.

[Richard Bates]

Because we fundamentally disagree with tax evasion?

I hope that everyone disagrees with tax evasion. Sorry I think I failed in getting my point across. The petition is about why chess is treated differently from sports. Let's say UKCC wasn't about chess but darts or any other activity HMRC classifies as a sport. Mr Basman's tax situation would probably be very different. Maybe he even would be government funded.

Now you can say: "But the law is the law" and I would agree. However the question is if it fair that chess is discriminated against. Why not just add chess to the list of activities exempt from VAT.

1) The petition is largely pointless. As has been pointed out elsewhere it has not even been put in the right place.
2) If you are going to support a campaign of this type it is better to do from a petition of strength and moral high ground. A petition that can be portrayed as being concerned with mitigating the failure of a commercial business to properly follow the tax laws as they exist is not such a petition
3) There is little evidence at this time that the problems of the UKCC have been caused by the non-exemption of chess from VAT per se, as opposed to a failure to treat the tax obligations seriously and establish a budget for the necessary administration involved accordingly(funded by slightly higher entry fees and/or out of the VAT they were entitled to but failed to reclaim on expenditure). They weren't confronted with an issue not faced by thousands of conventional small businesses up and down the country which expand to a level above the VAT threshold.
4) It is not particularly clear that a VAT exemption for chess along the lines of that available to physical sports would even apply to the UKCC as presently constituted.

[Richard Bates]

It was recently leaked that the ECF had an internal row about how to fill the gap left last year by the suspension of e2e4 tournaments. It was claimed that at least one director wanted the replacement tournaments branded as ECF.

Not on my watch.

Chapter and verse please.

There are no independent directors on the ECF board pursuing independent agendas. There is just the agenda of the ECF. It is of course helpful that, thanks to the attempts of (not) independent directors pursuing (not) independent agendas, the critics can cherry pick to make the agenda of the ECF whatever suits their argument.

[Johan Rydahl]

1) The petition is largely pointless. As has been pointed out elsewhere it has not even been put in the right place.
2) If you are going to support a campaign of this type it is better to do from a petition of strength and moral high ground. A petition that can be portrayed as being concerned with mitigating the failure of a commercial business to properly follow the tax laws as they exist is not such a petition
3) There is little evidence at this time that the problems of the UKCC have been caused by the non-exemption of chess from VAT per se, as opposed to a failure to treat the tax obligations seriously and establish a budget for the necessary administration involved accordingly(funded by slightly higher entry fees and/or out of the VAT they were entitled to but failed to reclaim on expenditure). They weren't confronted with an issue not faced by thousands of conventional small businesses up and down the country which expand to a level above the VAT threshold.
4) It is not particularly clear that a VAT exemption for chess along the lines of that available to physical sports would even apply to the UKCC as presently constituted.

1) Yes it is pointless if no one signs it. I agree it will probable fail. But that does not invalidate the point.
2) Moral high ground? I think there are few things that are more moral than doing non-profit work for the future generation. UKCC is a fantastic initiative. Now when Mr Basman is bankrupt I doubt that someone else will step in and take over. We can just hope.
3) Well of course I agree that it was the failure to treat the tax obligations seriously that caused this tragedy. I just don't agree that the tax obligations are fair.
4) Not clear? Why not? There are very large organisations for children's football, swimming etc. that are exempt from VAT. Anyway if there are details that need to be changed, I am sure someone like yourself would be able to give him advice.

[JustinHorton]

Moral high ground? I think there are few things that are more moral than doing non-profit work

Doing what, sorry?

[Richard Bates]

4) Not clear? Why not? There are very large organisations for children's football, swimming etc. that are exempt from VAT. Anyway if there are details that need to be changed, I am sure someone like yourself would be able to give him advice.

Or perhaps an expert. But then if expert advice had been desired and sought, the current situation might never have arisen. VAT exemption or no VAT exemption.

Anyway...

https://www.gov.uk/government/publicati ... 0145-sport

Section 4

[Neil Graham]

Firstly could I thank Alan Kennedy for his informative and helpful posts on this thread.

Can I return to the topic in the heading? I think everyone acknowledges that the petition is a waste of time. There have been ignored petitions in the past and the EBU Court Ruling of 2015 has effectively ended the "is chess a sport" debate.

Mr Upham has been, effectively, Michael Basman's mouthpiece on this forum. No one has suggested what Mr.Basman intends to do - his press releases have been an embarrassing waste of space. What we have learned from Mr.Upham is that as well as not paying VAT, Mr.Basman "does not retain an accountant in order to save funds to UKCC." but that accounts had been drawn up for the UKCC. Similarly it is understood that Mr Basman paid Income Tax but again there are no details - a figure of £20,000 profit was intimated.

In order to save this event, full audited accounts need to be seen, details of sponsorship contracts need to be clarified - goodness only knows what Delancey think of the current situation. Appearing as St.George or Alan Turing is not going to save this event.

[Roger de Coverly]

Section 4

To paraphrase, it indicates that for a sporting body to gain VAT exemption, it has to be constituted as an unincorporated association or a Company limited by guarantee (CLG), amongst other conditions. Neither of these were the structure adopted by Mike Basman. Those who are expert in these matters would be able to tell us what the potential penalties would be had either of these structures been adopted by UKCC along with its non-payment of VAT. By way of example, those chess bodies considering themselves potentially vulnerable to adverse legal action, such as the ECF and the Surrey Chess Association have adopted the CLG structure.

Perhaps when UK politicians of any hue, gripe about the decline of participation in sports, they should take a look at the rule set potential organisers are obliged to comply with.

[Mike Truran]

It was recently leaked that the ECF had an internal row about how to fill the gap left last year by the suspension of e2e4 tournaments. It was claimed that at least one director wanted the replacement tournaments branded as ECF.

Still waiting for chapter and verse. You're very assiduous on replying promptly to most posts. What's the problem here?

[Alan Kennedy]

Firstly could I thank Alan Kennedy for his informative and helpful posts on this thread.

Thank you it has been a pleasure.

In order to save this event, full audited accounts need to be seen, details of sponsorship contracts need to be clarified - goodness only knows what Delancey think of the current situation. Appearing as St.George or Alan Turing is not going to save this event.

The information given above raises an number of questions. If the profit figure of £20,000 above is correct then in essence Mike Basman gave his time free of charge after you deduct from the profit figure an estimate of the VAT that the business should have been paying. In essence the UKCC made no money. One of the comments I often make in this sort of circumstance is "do you realise you could earn more driving a bus". Alternatively I have no doubt a man of Mr Basman's consider intellect could command a salary of say £50000 per annum and he could paid someone else to run the UKCC for him and still been better off. The whole event appears to have been simply uncommercial and ill conceived which is where one would expect a professional adviser to step in and be quite forceful. I totally agree with Neil about the information that needs to be used.

When advising clients on rescues the first question is always is the business worth saving. Clearly it has enormous benefits for chess but not for the entrepreneur who runs it - expecting someone to work for free is quite simply unfair. From what I have heard so far there would need to be some very difficult questions asked about for example pricing before a decision could be reached on this point.

The next question is given the business has made no money in the past what is going to change. I see nothing to suggest Mr Basman wants to change anything.

The last question is "can the current management deliver the change required in order to bring about sustainability and restore confidence of for example the sponsors." From what I have seen so far eg petitions trying to change something that will never change (the goverment wont make the vat position retrospective and even if they did they would not annul Mr Basmans bankruptcy) there must be severe doubt about whether they are the right people to take the issue forward. Very often the mangement have too much emotion and ego invested in the business to take clear decisions which is why new management is always preferred.

When i raise similar comments with clients in difficulties a considerable number of them react with horror and seem to think I am trying to kill their baby. They often blame others and fail to accept responsibility for either own actions or deficiencies in their skill set. It is the government's fault I have to pay VAT being the argument used here. It is by far and away the best approach to admit your own mistakes and move on.

I remember when studying insolvency we were taught when they first started only 2% of Company voluntary arrangements "succeed" becuase the did not address the above three issues. I do not know if the situation has changed but frankly I doubt it. To rescue a failed business (or not for profit) is extremely difficult and will require a breadth of skill that frankly i doubt Mr Basman and his advisers have. They appear to asking the wrong questions and approaching the issues in the wrong way. This may seem harsh but insolvency and business is harsh I would also add building a small business is extremely difficult which is why only 1 in 2 last more than two years and only 1 in 10 get to the 10th year. For this reason I used to say to clients in Mr Basman's position, at least you tried - there are a lot of people who have never done that and you deserve credit and respect. In Mr Basman's case I suggest utmost credit and respect because of what he has done for UK children's chess - it is a worthy cause.

As before the above is general advice. Specific advice should be sort from an insolvency practitioner. Most will give an hour free of charge.

[Roger de Coverly]

Still waiting for chapter and verse.

As someone with personal control of any number of votes on the ECF Council, did you not see the potential election material referred to by Mick Norris?
http://www.ecforum.org.uk/viewtopic.php ... 18#p187218