| Finance (No.2) Bill
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Mr Hammond: On a point of clarification, the hon. Lady used the term "registered charity". My hon. Friend the Member for Sevenoaks has drawn it to my attention that clause 47(9) says that the word "charity" will have the same meaning as in section 506 of the Taxes Act 1988. That section says that a charity means any body of persons or trust established for charitable purposes only. That does not necessarily mean a registered charity in the sense of being registered with the Charity Commissioners. Perhaps the hon. Lady will clarify which it is. Mrs. Liddell: Let me be specific; that was a helpful intervention. It means charities based here. I am sorry if I used the wrong language inadvertently. We must be clear about what the end date is likely to be. By that time, the review of charity taxation will have been completed and, hopefully, other arrangements for charities will be put into place. The hon. Gentleman asked a valid point about promotion. It is important to promote this. There has been a lot of publicity about gift aid, but much less publicity about this valuable aspect. The Chancellor is considering that and discussing with charities how best to promote this useful and worth means of assisting poorer nations, although it is perhaps less sexy than gift aid. We are working hard to develop a promotional strategy, so it will be up to us to obtain the advice of development and aid charities about the most suitable time to launch this to ensure that it does not conflict with other initiatives. The hon. Member for Sevenoaks asked why we did not let businesses give directly to schools and colleges and why the gift must be made through a charity. We had a brief debate this morning about human rights issues and about ensuring that gifts were specifically targeted. It is not practical to define "educational establishments" in such overseas countries because they range widely. A highly westernised, developed country's analysis of an educational establishment is different from that elsewhere so it would be difficult to police the measure if we did not use charities as intermediaries, bearing in mind the important points raised this morning about ensuring that donations were charitable donations for the people not for the regimes, because some of those regimes are not especially attractive. The hon. Member for Sevenoaks also asked whether the donor would be taxed on any benefit that he received. I am plucking this out of the air, but it is not inconceivable that a product is donated to a school, but a charge is made to operate that product and therefore a company makes a profit as a consequence of that donation. The provision is intended to ensure fairness, and no mischief is involved. It will ensure that there is to use that unfortunate expression a level playing field. The hon. Member for Runnymede and Weybridge (Mr. Hammond) asked about paperwork. We want paperwork to be kept to the minimum that is necessary to operate the system effectively. It is well known that charities take the lead in the handling of paperwork. They are pretty effective at handling the bureaucratic side of giving, and we shall build on their skills. It is also important to recognise that the donor has to signal his or her intention to give to a charity, which has the responsibility of notifying the Revenue. We shall ensure that the system is monitored as effectively as possible. I hope that I have covered all the points that were raised by the hon. Member for Sevenoaks. I got slightly out of synch in answering them, and if, when I read Hansard, I realise that I have missed any I shall ensure that he gets a written response. Mr. Fallon: The Economic Secretary's comments have been helpful, and I welcome her commitment to simplify the paperwork. The forms for the give-as-you-earn scheme, for example, are relatively simple, but I hope that she will do something to eliminate unnecessary paperwork. She accepted that the donor and the charity have to notify the Revenue, but the system needs to be as simple as possible. The Economic Secretary has done her best, and she made helpful comments on all my questions, but I want to return to my question about the end date. The start date has slipped a little the Chancellor's press release states that he hopes that the millennium fund will be in place by the beginning of the financial year 1998-99, but that cannot now happen. That was no one's fault there was proper consultation, which we fully accept. The Economic Secretary confirmed that the first designated day cannot be until after Royal Assent. In that case, should not the scheme be extended by three months to the end of the financial year 1999-2000? That would have the added benefit of making the end date fit neatly with the end of the financial year. The scheme would not finish exactly at the end of the year 2000, but it would finish at the end of the financial year 1999-2000, which would be neater and simpler for all concerned. If she cannot concede that point immediately, will she at least undertake to consider it? Mrs. Liddell: I cannot concede that point. I am sorry to have to disappoint the hon. Gentleman, but we had to take a decision about when the scheme will end. The Opposition's points are well received, and we shall do our best to ensure that the House's determination to make the clause work is borne in mind. By the time that this aspect of charitable giving is completed I hope that the new charity arrangements will be in place. That system will allow for the development of a focused regime for charities. The hon. Member for Runnymede and Weybridge asked about taxes, and I probably glossed over the matter too rapidly in my response. "Charities", for the purposes of the Taxes Act 1988, refers to registered charities and to tax-effective giving. The Charities Commission does not require all charities to be registered. Many smaller charities, which may operate locally, do not have to register. If a charity is charitable within charities law, clauses 47 and 48 will apply irrespective of whether the charity is registered. If the body is recognised as a legal entity as a charity, the clauses will apply. I hope that that clarifies the situation. Mr. Fallon: I am a little disappointed with the Economic Secretary's response to my point on shelf-life. The scheme was supposed to last two years and nine months. We have lost four months becausse it cannot come into operation until after Royal Assent. I wanted her to add just three months on the other end. I accept that the scheme has to finish at a specific time because otherwise it would run on and on. I should simply like her to put back three of the four months that we have lost. I hope that she will think about that. Mrs. Liddell: I am grateful to the hon. Gentleman for returning to that point. I cannot give him a commitment now but I will consider the matter in case there is some way in which we can make progress. Mr. Hammond: I thank the Economic Secretary for further clarifying the position on registered or unregistered charities. I understand her intention in stating that it applies to charities that are based in the UK only. However, I am not sure that section 506 of the Taxes Act 1988 makes that clear. It says: [Mr. Hammond]
A general principle of tax law that I am unaware of may override that and limit the provision to UK-based charities. Do the Government intend to apply the measure to UK-based charities only? Will the Economic Secretary consider whether further clarification is required? Mrs. Liddell: I thought that I had given the Government's clear intention. I keep my copy of the Taxes Act in my locker downstairs and I do not have time to spring down and get hold of it. I am trying to be as clear and helpful as possible. UK charities have been specifically defined by a legal decision in the courts. That will help the appropriate authorities decide how the clause should be administered. Question put and agreed to. Clause 47 ordered to stand part of the Bill.
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