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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 charitywhich is considered to be unlikelythe 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.
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:
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.
"Senior Civil Service pay and grade structures are determined by the Cabinet Office, but departments including the Charity Commission have flexibility to make their own arrangements for determining individuals' pay by reference to performance. Therefore, except for a small number of its most senior staff, the Charity Commission already effectively has control over the terms and conditions of service of staff within it . . . The commission has discretion in how its total pay budget is divided up. It also agrees its arrangements annually with the Treasury to ensure that they are broadly in line with other departments. Paragraph 5(2) and (3) of Schedule 1 does not mean that the Minister for the Civil Service or officials at the Cabinet Office acting on his behalf have to approve the detailed terms and conditions of service of either the chief executive or Charity Commission staff in general. In practice, for the Charity Commission as for other departments, they approve only the broad framework within which detailed decisions on terms and conditions are taken by departments themselves".[Official Report, 28/6/05; col. 174.]
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 5the "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 executivethe 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 Commissionsomething 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" situationone 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,
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,
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