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Some clubs had been told that they could allow a tax-free expense allowance of £5 for each training session and £5 more for away games. Others were told that that was totally inadmissible and that the only allowance they were allowed was 40p per mile for travelling to away games, while others still were told
that they could also give a tax allowance of 40p per mile for travelling to training, although I think that decision was subsequently overruled.
If we are to have new rules for the clubs and expect unpaid volunteers with no tax experience to implement them, surely there should have been rules put in place and laid down in an easy-to-use document that all clubs could follow. That has singularly failed to happen. On top of that, the exceptions that are being allowed are not being laid down equally between all clubs, which leads to even more confusion and also some hard feeling between the clubs. That is surely not meant to happen.
Another area of concern is the way the tax man has dealt with these cases. Instead of starting the new regime from scratch at the beginning of April this year for example, in some cases the Revenue is making clubs pay tax in retrospect for the past two years. There are examples of clubs having to pay bills of more than £7,000 that they never had any idea they would have to pay. For the smaller clubs, that will make a massive difference, yet despite that, the protests seem to be met with a large amount of indifference by the Revenue.
The third area is the effect on the junior football clubs. Figures from the SJFA show that the average turnover of volunteers is usually about 3 per cent. a year. This year, the rate has been 15 per cent. The figure tallies with the anecdotal evidence I have received from the various clubs I have spoken to. It may not be simply because of the tax regime and the new demands placed on the members of the club committees. There might be other reasons, but I think that we are sensible enough to know that the new tax regime has had a major effect.
Dr. Gibson: I recall that in my days playing junior football we had to hitchhike to the Kello Rovers matches in Ayrshire and Dumfriesshire. What happens about insurance for injuries that may occur during those games? Is there a Government edict on players covering their own insurance or do clubs have to take it out for them? Players may also have other jobs.
Mr. McGovern: I cannot give a definitive answer and I am not sure whether there is legislation to cover that. My understanding is that clubs take out insurance for every player so that they are compensated for loss of earnings from their full-time job if they are badly injured. As my hon. Friend said, the players are usually amateurs and have other occupations.
Jim Sheridan: I believe that clubs take out insurance for players if they can afford to do so, but most of them cannot afford it, so their players live in danger of their main livelihood being affected.
The volunteers and committee menthey are overwhelmingly menare the lifeblood of the game and without them the clubs would simply cease to exist and the vital link that they provide for the community would goand all for the sake of easing the bureaucracy for the Inland Revenue.
I am sure that there must be a way through the problem, albeit that it might take a little imagination from the Inland Revenue. Perhaps the Revenue could design a system so that any club with player expenses below a certain level could be allowed to use the old system and those with expenses above that level could be put on PAYE. That would provide clarity and allow the Revenue to get those clubs that they are obviously trying to target to sort out their own taxes. If the limit were set high enough it would provide protection for junior football and a long-term solution to stop what the Revenue obviously sees as junior clubs shirking their responsibilities. There would almost certainly be problems with that approach, but I am sure that my right hon. Friend the Minister and her many officials could put their minds together and come up with something suitable.
In 1997, our newly elected Labour Government published a pre-Budget report that emphasised the need for a tax system that is not only fair to current and future generations, but is seen to be fair. I am sure that we all stand by that. It is obvious from the evidence that treating junior football clubs as employers is technically legal, but will never be seen to be fair. It is not fair to the communities in which the clubs operate, it is not fair to the people who give their time free of charge to provide a service to the community and it is not fair to the many people who enjoy junior football in Scotland. I urge the Minister to reflect on that when she responds.
Jim Sheridan (Paisley and Renfrewshire, North) (Lab): I shall be brief because most of the points that I wanted to make have been covered and I do not intend to make a geographical trip around Scotland because most people know what the problem is.
I do not want to give the impression that the Government have been unhelpful. There has been a lot of correspondence on this matter and I believe that the Minister is willing to try to find a way forward. We will do anything we can to help her.
I want to put it on the record that we are not whingeing Scots wanting to be treated differently. If this were a whingeing Scottish argument, Scottish nationalist Members would be here, but they have not turned up.
My local club, Renfrew Juniors, has had a very successful season and just missed promotion. Like many other junior clubs, it is under pressure from housing developers who want to build houses on its football pitch and take facilities away from the local community.
I want to paint a picture of the weekly life of committee members of a junior football club. They are usually men, while the women usually have to wash the football strips, socks and so on, and make the tea and sandwiches. Unfortunate as that may be, it is the reality of life.
The week begins with assessment of the injuries from the previous weekend and dealing with the insurance company, if the club can afford insurance and someone has been seriously injured. Committee members are involved not just in the summer months of July and August, but in November, December and January when they have to cut the grass, ensure that the park is suitable for play and repair pitch marks and so on for the weekend. They must contact sponsors to try to obtain money to keep the ground in a suitable condition for play. They must also go to the park on Saturday
mornings to ensure that the game can go ahead. All those activities are part of a committee members life. It may be ridiculous, but are we going down the road of taxing washing machines that are used to wash football strips?
Renfrew Junior football clubs stadium is made available to other clubs in the community, particularly during the week, and people with particular skills, such as plumbers and joiners, are often excused from training in return for repairing the roof or fixing the pipes. I urge the Minister to consider our comments seriously.
Mr. Devine: My hon. Friend touched on a committee members week and referred to finances. People go around pubs and clubs collecting totes on Friday nights and making draws on Sundays. They are involved all week. At a recent surgery in Fauldhouse, a local committee member told me that I had to spend £50 to sponsor the ball if I did not want the risk of him going around the community saying that the local MP was miserable. Fundraising is important and happens almost daily.
Jim Sheridan: I thank my hon. Friend for that valuable contribution. Life as a committee member means raising money, contacting sponsors, getting programmes printed, and making sure that players can get to games on time and that transport is available. Volunteers personal finances are involved because they make telephone calls to arrange referees, contact players and so on. Those imponderables are not taken into account and committee members often have huge telephone bills because their clubs cannot afford to repay them. That happens for the reasons that have been explained.
The Minister kindly offered to have a meeting with interested parties later this month. If we cannot reach a satisfactory conclusion today, I would welcome the opportunity to meet her with other interested parties to see whether we can reach some commonality and solve the problem.
I emphasise that we are not looking for something that does not operate elsewhere in the United Kingdom. If players are earning money above the threshold they should pay tax and if junior football clubs are making profits they should pay tax. The problem is that junior clubs do not have fancy accountants and expensive lawyers. They depend on peoples own experience, and therein lies the problem. The administration cost of the scheme will be a burden on the clubs. That is the crux of the problem, and it could force clubs to go to the wall.
I congratulate the hon. Member for East Lothian (Anne Moffat) on securing the debate. I also congratulate the hon. Member for Dundee, West (Mr. McGovern) on tabling early-day motion 2178, which highlights the concern that local clubs could go out of business because
of the new guidelines, which put too much of a burden on volunteers who cannot cope with an extra work load.
I am sure that I am not alone is being able to cite several examples of local clubs, whether football clubs, social clubs or cricket clubs, that are run by small groups of volunteers who give hours of their time just to keep the club afloat. Those people cannot now be expected to look after players tax affairs as well.
There is a real danger that people will end their involvement with local clubs, forcing many to close, simply because when one or two walk away, there is no one left who is prepared to run them. The more serious problem with the changes is the Governments decision to chase the tax back to 2003. I understand that, as a result, some clubs face bills of thousands of pounds in back taxes.
Two people run a club that I know about. One of them runs the bar, does the maintenance work, fills in the grant applications, acts as security when local yobs who are hanging about cause damage, cuts the grass and even referees the matches. In his spare time, he has a full-time job, too. I am sure that, given the prospect of having to fill in forms about his players tax affairs, he is likely to think that it is time to call it a day. The club is run on a shoestring and it simply cannot afford to pay an accountant to sort out its taxes. I also suspect that if the club were faced with a demand for back taxes covering the past three years, it would probably be unable to pay.
The hon. Member for East Lothian made a number of valid points, especially in relation to the benefits that such junior clubs bring to young people by keeping them off the streets, giving them something good to do, making a difference to their lives and keeping them fit and healthy. She also made a valid point about the payments that are made to such players. I shall be interested to hear from the Minister the effect that the rule changes might have on the money that must be paid to players. Will they eventually have to be paid the minimum wage? No doubt that would mean a massive increase in costs to clubs.
The hon. Member for Dundee, West conducted us on an excellent geographical tour of practically every constituency in Scotland, except those in the highlands and islands and that of Orkney and Shetland. I hope for his sake that he did not miss out any clubs, because that could be damaging for him locally.
We need a common-sense approach. It is crazy that Revenue and Customs is expected to chase tax payments, in some cases on as little as £10 wages. Surely taxpayers money would be better spent ensuring that top earners, including a number of premiership footballers, pay the right amount of tax. If the Government are determined to continue with their
policy, it would make far more sense for them to consider the turnover of sports clubs and set a limit over which clubs would be expected to sort out their players tax affairs. A clubs turnover provides an indication of its size and scale, and therefore whether it can afford to employ an accountant, or whether it must use somebody who is capable of undertaking that work from within the club.
I also seek the Ministers clarification on the cost of recovering such a relatively small amount of money. Has there been an assessment of what tax revenue the changes will raise? Will the amount raised cover the cost of chasing it? Will she also provide some information about the relative success of the pilot scheme that I have read about? What effect has it had on the viability of the clubs involved? Have any gone out of business, or are any under threat of going out of business in the near future.
The Government should also consider the viability of backdating the change to 2003. Local clubs are struggling to pay the bills that they expect to receive, never mind those that are suddenly dumped on them. If the Government are not prepared to review their decision, clubs should be given more opportunity to phase in the changes. They should not be chased for back payments.
It is clear from the concerns that local clubs have raised that the changes will have a serious impact on the viability of a number of them. Any additional revenue could be cancelled out by lost revenue as other clubs go out of business. The Government need to rethink their strategy, and I look forward to hearing what the Minister has to say.
Mr. Paul Goodman (Wycombe) (Con): Mr. Chope, it is a pleasure to see you in the Chair. I shall also be brief, because much of the ground has already been covered. I shall begin by congratulating the hon. Member for East Lothian (Anne Moffat) on securing the debate. She has been involved with early-day motion 2178, as has her hon. Friend the Member for Dundee, West (Mr. McGovern).
I am far from an expert on the world of junior football clubs in Scotland, and I suspect that the opportunities for me to enlarge my knowledge will be limited, but from what the hon. Lady and hon. Gentlemen said, one point came over loud and clear to me and, I am sure, to the House: the great social and cultural importance to the whole community of the clubs whose financial livelihoods seem to her and her colleagues to be under threat from the change that has been made. Football is not just a common language. The hon. Lady mentioned the World cup, and I was very amused by the banter between some Government Back Benchers who seem more inclined to support Rangers, and others who might be more inclined to support Celtic. Even though my knowledge of football in Scotland is limited, it is extensive enough to clock that. More seriously, football is not just a common language, but a neutral spacean odd way of putting it, but accuratein which, as the hon. Member for Blaydon (Mr. Anderson) said, people from different backgrounds and cultures who might not mix in other circumstances can come together. That is why, as he
said, the police are so often interested in building up community football, and why a threat to the financial future of such clubs is so serious.
If I understand the situation correctly, players in junior clubs were minding their own tax affairs and the clubs were muddling along happily, building up a community, building up football and playing a role in their communitiesand then the change occurred. Like other hon. Members, I am not clear on why the Inland Revenue made the change, whether a local department made it, or the degree to which the decision had national backing. I would be grateful to the Paymaster General if she cleared that up; I am sure that she will.
The change will have a knock-on effect, because clubs will, in effect, become employers. Government Back Benchers brought up many examples of what that might mean in practice. I think that it was the hon. Member for East Lothian who said that clubs might have to pay the minimum wage. It is the first time that I have ever heard a Labour Back Bencher express any reservations about paying the minimum wage, but in those circumstances I can understand why she is concerned. Other examples followed, including whether shin pads will be taxed. One enters such territory if one changes the nature of taxation.
As Labour Members saidI did not get the details, but I understand the general picturethe people who make such clubs work are not professionals but essentially amateurs. They love what they do, and they support the club because it is a community endeavour. Now, they will have to deal with extremely complicated tax arrangements that will stretch their expertise. That will clearly be a problem for the clubs.
As well as asking the Paymaster General to give us a few more details of how the change arose, I should like her to comment on the element of retrospection and back payment, which, on the face of it, seems a bit questionable. I would also be grateful if she explained the wider implicationsif there are anyof the change for other clubs and societies, including those involved in sport. She may have to finish off this point at the meeting that she will attend with her colleagues, but what can she do to find a way forward that will allow the clubs a bit of space, so that they can find a balance that allows them to pay the tax that they should pay without imperilling their financial future? We look forward to hearing what the right hon. Lady has to say.
The Paymaster General (Dawn Primarolo): I, too, congratulate my hon. Friend the Member for East Lothian (Anne Moffat) on securing the debate. A lot of important issues have been raised and I welcome the opportunity to discuss them.
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