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New Clause 7
Taxation of community amateur sports clubs
'. After section 508 of the Taxes Act 1988 insert—
"Community amateur sports clubs
508ZA (1) Where—
(a) a club which has as its object the promotion within the community of amateur sport, physical education or the provision of sports facilities is approved for the purposes of this section by the Secretary of State; and
(b) the memorandum of association or other similar instrument regulating the functions of the club precludes the direct or indirect payment or transfer to any of its members of any of its income or property by way of dividend, gift, division, bonus or otherwise howsoever by way of profit;
there shall, on a claim in that behalf to the Board, be allowed in the case of the club such exemption from tax as falls to be allowed under section 505 in the case of a charity the whole income of which is applied to charitable purposes.
(2) The condition specified in paragraph (b) of subsection (1) above shall not be deemed not to be complied with in the case of any club by reason only that the memorandum or other similar instrument regulating its functions does not prevent the payment to its members of reasonable remuneration for goods, labour or power supplied, or for services rendered, of reasonable interest for money lent, or for reasonable rent for any premises.
(3) The Secretary of State may by regulations made by statutory instrument specify those classes of amateur sport, physical education and the provision of sports facilities to which the provisions of this section shall apply.".'.—[Mr. Flight.]
Brought up, and read the First time.
Mr. Flight: I beg to move, That the clause be read a Second time.
Madam Deputy Speaker: With this it will be convenient to discuss the following amendments: No. 5, in schedule 18, page 242, leave out from beginning of line 24 to the end of line 37 on page 243 and insert—
'4 Section 505 of the Taxes Act 1988 (charities: general) applies to registered clubs and qualifying purposes as it does to charities and charitable purposes.
5 Section 25(10) of the Finance Act 1990 (c. 29) (gift aid) applies to a registered club in respect of any gift received by it as it applies to a charity in receipt of any qualifying donation.'.
No. 6, in page 243, leave out from beginning of line 42 to end of line 5 on page 245.
No. 7, in page 245, leave out lines 7 to 31 and insert—
'9 In respect of all gifts and transfers to a registered club, which for the purposes of this Schedule include membership fees, the donor may make such claims and elections as would be available under any enactment if that registered club were a charity.'.
Mr. Flight: For some time there has been cross-party support for the view that qualifying amateur sports clubs should either be able to qualify as charities or to have a tax relief parallel to charities. What has happened is a dog's breakfast in that last November, the Charity Commission decided that some amateur sports clubs could qualify on the basis of contribution to health and fitness, but others could not. Consequently, angling, crossbow, flying, motor sports, pistol shooting and various others do not qualify. The Government had made certain promises, going back to the last election, on tax reliefs for qualifying amateur sports clubs, not expecting them to qualify as charities, and those are introduced by the Bill. However, they are slightly less generous than those which would obtain if an amateur sports club became a charity.
The duties of charitable status are not hugely onerous, but they entail work, and some smaller clubs that would qualify as charities may not want to make the effort to become a charity. In essence, the new clause states that it is ridiculous to have two sets of slightly different rules when the amounts of money are not material, and suggests that it would be more sensible for qualifying amateur sports clubs to enjoy the same tax reliefs as charities.
Under the Revenue rules in the Bill, gifting is permitted only from individuals, not companies. There will be misunderstandings about that and rows about claims. There are differences in the rules for trading income and stamp duty. Above all, there could be a difference in rates. Before the election, the Government suggested that they expected to put in place measures that would give 80 per cent. relief. They cannot be part of the Bill because they are not financial, but the figure was miraculously reduced to 50 per cent. That is important for many amateur sports clubs.
The cost of the relevant provisions is £5 million—not a huge sum. The modest, small new clause would tidy up the Bill. Amendments Nos. 5, 6 and 7 would allow membership fees to qualify for gift aid on an equal basis with charities. Is there a material difference between
membership of a qualifying, virtuous sports club, which makes people healthy and saves the national health service money and membership of Save the Whale? We believe that it would be sensible for all membership fees to qualify.We raised the issue in Committee and discussed various aspects of it. However, the fundamental point was not tackled. We hope that the Government have had second thoughts. Instead of making everything even more complex, let us have a clean, simple arrangement.
Mr. Edward Davey: I support the new clause. The relevant issues were debated in Committee, when my hon. Friend the Member for Southport (Dr. Pugh) put our position on the record. The matter was discussed in two sittings and I therefore do not wish to detain the House at length. The Government have offered sports clubs a choice between the route set out in the Charity Commissioners' recent ruling and the provision in the Bill. That is a welcome improvement, but as the hon. Member for Arundel and South Downs suggested, it creates some untidiness and means that the decision is difficult.
People who do not have much expertise in the matter because their core aim is to run a sports club, with all the attendant benefits for communities throughout the country, are being asked to make difficult decisions. Should they decide to become a charity, with the various duties, responsibilities and possible change in the club's ethos that that entails and get the available reliefs? Or should they go down the route that the Government propose, and obtain slightly different reliefs? It is a complicated decision. It is therefore not sensible simply to say that it is wonderful that sports clubs have a choice. It would be better to align the choices so that they are identical for tax purposes.
The new clause is sensible and I believe that the Government would agree with its spirit. Perhaps they wish that they had thought of it. The Economic Secretary is unlikely to accept the new clause, but I hope that he will show that the Treasury is open minded and that we can look forward in due course to changes that the Government have drafted.
Mr. John Greenway (Ryedale): It is often the way in the House that, if there is something that an hon. Member has wanted to talk about for a long time, they only get the opportunity to do so very late at night, when they have no wish to detain the House unnecessarily. I do, however, want to speak to the new clause and the associated amendments.
There are 110,000 community and amateur sports clubs in this country. They are run by volunteers, and they provide the biggest resource to grass-roots sport participation in the entire United Kingdom. As my hon. Friend the Member for Arundel and South Downs (Mr. Flight) said, in last year's Budget, the Chancellor of the Exchequer proposed the introduction of a tax package, and Ministers in both the Treasury and the Department for Culture, Media and Sport heightened expectations that that package would include mandatory rate relief.
That perception was encouraged at the general election. I well recall, two days before polling day, an argumentative joint interview with the hon. Member for
Vauxhall (Kate Hoey)—then the Minister for Sport—not about whether the Government wanted to provide mandatory rate relief but about how that should be done. The sense that mandatory rate relief was the Government's plan was, therefore, certainly heightened at the election.When the Government were about to publish their White Paper on this tax package, however, the Charity Commissioners produced a rabbit out of the hat by suggesting that they were prepared to amend their definition of "social purposes" so as to include many of these sports clubs. Ministers have been very enthusiastic that charitable status would deliver mandatory rate relief—as, indeed, it would. We find, however, that the mandatory rate relief proposal has been dropped from the Treasury's own tax package. Yet, on the very day that the White Paper was published—30 November—the Treasury issued a press release that stated that its tax package would include 80 per cent. mandatory rate relief. I take that as an indication that this idea was dropped at the last minute, because there was an alternative route.
My hon. Friend the Member for Arundel and South Downs and the hon. Member for Kingston and Surbiton (Mr. Davey) have made the point that this is not a popular choice for those who run the many amateur sports clubs to have to make. They are volunteers, this is a complex matter, and they cannot understand why Ministers are saying, "Yes, we think you should have mandatory rate relief, but you can only have it by going down the charitable route. You can't have it through our tax package." That shows a very strange sense of priorities.
For that reason, my hon. Friend the Member for Arundel and South Downs felt it sensible to raise this issue in Committee and on the Floor of the House. Where is the logic in saying, "You can have mandatory rate relief by one route, but not by the other"? That is subject, of course, to the caveat that the purposes of the club must be clearly defined, and relief restricted to genuine community and amateur sports clubs.
Earlier today, here at the Palace of Westminster, the Central Council of Physical Recreation launched its latest initiative on the value to health of sports participation. Those colleagues who attended the launch were told that the Government spend £1,100 per capita on health, but only £1.34 on sport, and any sensible interpretation of a written answer that I received from the Secretary of State for Culture, Media and Sport last week would be that half that £1.34 is spent on administration and regional bodies.
Nobody in the House can be proud of this situation. It is time to begin to redress the balance of priorities. At the most recent Department for Culture, Media and Sport Question Time, the Minister for Sport said that the Government were looking to see how they could extend their relief to provide this rate relief, but I would say to the House that it really is time to give these community and amateur sports clubs the support that they deserve. I urge hon. Members on both sides of the House to do what their constituents, and the sports clubs in their constituencies, want, which is to vote for this measure.
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