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Lord Phillips of Sudbury moved Amendment No. 8:

Page 4, line 24, at end insert "unless and until it registers as such, in which event it shall cease automatically to be a registered sports club"

The noble Lord said: My Lords, the amendment seeks to make life easy for a registered sports club that wishes to convert to a charity. The addition of the words in Amendment No. 8 would allow that to happen in the simplest and most direct way and simply provides that a registered sports club remains a registered sports club unless and until it registers as a charity,

That sounds a little arcane, but registered sports clubs are a relatively new class of quasi charity. They have all the benefits of a charity except one particular tax advantage, but they are not charities. That is important in terms of them not coming under the purview of the Charity Commission, which is the point of subsection (4).

A small number of registered sports clubs want to become charities and this is the simplest way of allowing that; it makes everything automatic. Although in Committee the Minister said that there could be tax disadvantages, there would be no tax disadvantages in a registered sports club becoming a charity. Any deemed transfer of its assets to the charity would attract no capital gains tax or other taxes. I beg to move.

Lord Bassam of Brighton: My Lords, I am grateful again to the noble Lord, Lord Phillips, for his careful explanation. In Committee we agreed to consider the amendment, as we have some sympathy with its thrust, which aims to simplify transition from a CASC to charity.

As it is drafted the Bill provides for an existing or new amateur sports club to choose between either CASC or charitable status. The process is not automatic, but it is fairly straightforward. In the event that a CASC wanted to convert to a charity—which is considered to be unlikely—the CASC would create a new club in charitable form, pass all the CASC's assets to it and then wind up the CASC. It would also be straightforward for a charitable club to convert to CASC status, since registration as a CASC would have the effect of the club ceasing to be treated as a charity,
 
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as Clause 5(4) provides that any club that has charitable purposes and is registered as a CASC is not a charity. Although the charity would trigger a deemed disposal of its assets when it ceased to be a charity, relief would be granted under the CASC legislation.

The CASC to charity transition would be smoother with this amendment, but it would create difficulties for a charitable amateur sports club that wished to become a CASC. Under the amendment a club registered with the Charity Commission cannot be a CASC. So in order for a charity to become one it would need to cease to be a registered charity first. On ceasing to be a charity there would be a deemed disposal of the assets. Any gain arising would not be sheltered by charitable tax reliefs, or the tax reliefs available to CASCs.

I hope that the noble Lord, Lord Phillips, will accept that while we support the intention behind his amendment it would create practical difficulties for a charity that seeks to become a CASC. As there is already a mechanism for an amateur sports club to convert from CASC to charity status, I invite the noble Lord to withdraw his amendment.

Lord Phillips of Sudbury: My Lords, I am grateful to the noble Lord for his response to my amendment. I did not agree with a passage at the end of it, because my amendment is not about converting from a charity to a CASC, as he calls it, but the reverse. I shall read what he says and, if I still think he is wrong, we shall have to deal with the matter at Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Speaker (Lord Boston of Faversham): My Lords, in calling Amendment No. 9, I have to tell your Lordships that if it is agreed to I cannot call Amendment No. 10.

Schedule 1 [The Charity Commission]:

Lord Hodgson of Astley Abbotts moved Amendment No. 9:

Page 77, leave out lines 41 and 42.

The noble Lord said: My Lords, with this amendment we return to a familiar topic that we presaged a few moments ago in the debate on the amendment of the noble Lord, Lord Phillips; that is, the independence of the Charity Commission. In moving this amendment I do not wish to appear to be looking a gift horse in the mouth, so I wish to place firmly on record my appreciation for the changes that the Government have already made on this issue, in particular the insertion of the new subsection (4) in new Section 1A (in Clause 6), which reads:

However, notwithstanding that, the provisions of paragraph 5 of Schedule 1 on page 77 continue to give me cause for concern, in particular subparagraph (3) which reads:
 
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It does not take a genius to work out that a future government of whatever political colour could use this measure to shape the staffing of the commission, and thus influence the commission's attitude and approach on key charitable and perhaps political issues.

When we debated this matter previously in Committee on 28 June the Minister said,

Those words are all very fine although the use of the qualifications "effectively" and "in practice" leave me with a slight concern. However, the Bill as presently drafted simply does not tally with what the Minister says. It states:

In my previous amendments on this topic which we discussed in Committee on 28 June, I sought to leave out the whole of paragraph 5—the "staff" paragraph of Schedule 1. I accept that that was too blunt an instrument. Therefore, today I ask the Government to accept this amendment, which tackles only the pay and rations of staff other than the chief executive—the latter's terms of service will still require direct approval as provided for in the Bill as presently drafted.

I note that the noble Lord, Lord Phillips, has a perhaps more silkily phrased amendment addressing this point, which was no doubt drawn up as a result of his legal experience. I should be happy to support that but I am convinced that unless we amend paragraph 5 of Schedule 1 along the lines that both the noble Lord, Lord Phillips, and I have in mind, we run the risk of fatally compromising the independence of the Charity Commission—something which I believe no one in this House wishes to see happen. I beg to move.

Lord Phillips of Sudbury: My Lords, Amendment No. 10 is grouped with the amendment just moved with irresistibility by the noble Lord, Lord Hodgson. We are in a real "Yes, Minister" situation—one of something approaching gobbledegook. I may be a lawyer, but I really do jib at a Minister of the Crown saying, during the last consideration of this,

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Paragraph 5(3) says that:

that is to say, staff other than the chief executive—

I would not for a second accuse the Minister of seeking to mislead the House, but he inadvertently misled the House. If his answer is, "Don't worry, old chap. We don't actually look at the terms and conditions of service of other members of staff", that is not good enough. My amendment, which the noble Lord, Lord Hodgson, called a little silkier, seeks to be a little more accommodating by stating that the appointment,

I lifted that from what the Minister said when we discussed this on 28 June.


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