Question proposed,That the clause stand part of the Bill.

With this it will be convenient to take that schedule 20 be the Twentieth schedule to the Bill.

As a sporting individual, Mr Amess, you will be particularly delighted that we are now turning to the question of community amateur sports clubs: I have a vision of jumpers for goalposts, as you relax with your Pimm’s while watching the sporting activity on the local recreational ground somewhere in your constituency. I know that many hon. Members have great regard for the sterling work that many volunteers in their constituencies do to keep sporting life going in neighbourhoods, towns and cities across the country.

The issue we are considering has therefore provoked significant interest in a number of quarters, not least in the form of a front-page story in the Daily Mail—a paper that I read religiously on a regular basis—on 29 May. The Mail was aghast at the Government’s attitude to village sports clubs, which, it claimed,

“face crippling tax bills after a major crackdown by the taxman.”

At a time when tax questions are under the spotlight, the Daily Mail said:

“The crackdown—described as ‘a tax on village life’—has left many cash-strapped clubs facing ruin after receiving bills dating back years for those who help out by doing the cleaning, making tea and mowing grass.”

The hon. Gentleman is one of the few shadow Ministers not to have come to campaign in my seat, but I look forward to him doing so. When he does, he might like to talk to Ipswich borough council, run by his party, which is forcibly ejecting the Ransomes sports and social club from its ground and doing everything it can to make sure that that voluntary organisation cannot continue to exist. In the comments he is about to address to the Minister, will the hon. Gentleman pay attention to the fact that Labour councils are doing their best to undermine voluntary sports associations in my constituency?

It would be wrong to suggest in any way that the hon. Gentleman was misrepresenting the realities of this issue, but I find it incredibly difficult to believe that Labour councillors and Labour authorities would behave in the way he describes. It does not ring true to me, so he must be mistaken in his understanding of that situation. I am sure we can find a way to clarify the matter for him at some later point; I do not know whether there are provisions for the Committee to adjourn to visit a particular location.

Order. Tempting as it might be to discover its delights, it would not be in order to adjourn to Ipswich.

What a shame, Mr Amess; I am sorry we will not be able to do that. The Minister needs to address the issue of the attitude taken by HMRC to what some have described as “easy targets”. Some cricket clubs have been severely irritated by the treatment of their institutions in contrast with the treatment of larger institutions that pose bigger problems. Amateur sports clubs rely on the help and good will of volunteers who coach and umpire, yet HMRC is at risk of saying that the funds given to cover those volunteers’ expenses or as recompense for their time should be treated somehow as a form of tax avoidance. It would be untoward if HMRC was being unfair to sports clubs in that way.

Indeed, a cricket club in Hertfordshire was recently subjected to five hours of tax inspection with HMRC officials—no doubt sent personally by the Exchequer Secretary to the Treasury, the hon. Member for South West Hertfordshire—who demanded tax on one-off payments made to volunteers who had been given cash in hand for helping out behind the bar or with the cleaning. The club concerned has been very exercised by what it sees as a David versus Goliath situation. Val Waring, the chairman of that club, has said that she does not get paid but does what she does out of her love for the club. The volunteers come back every week to hoover the floor and put the tea on. There has to be a bit of common sense, or some clubs will be shut down.

Chairman, I regret that you are banning us from going to Ipswich for a sitting of the Committee. It is a long time since I have sat next to a cricket pitch on the outskirts of Ipswich drinking a pint of cool Tolly Cobbold—but I reminisce too much.

Would my hon. Friend regard this as taxing the big society? I understand that HMRC is conducting a tax investigation into individuals who have gone through  the bother of getting coaching certificates for football so that they can help out in the local community. HMRC’s focus in that respect seems a little bizarre.

Clearly there have to be rules, and rules need to be enforced, and it is incumbent on us all to ensure that the tax code is in order and set out. There is obviously some motivation, however, somewhere in the Treasury, to put undue emphasis on enforcement, and the checking and double-checking of small sports clubs—perhaps it is in Bromsgrove. I am not sure from where the motivation comes for that drive within HMRC, but the issue is proportionality and ensuring that common sense is applied. I would be grateful, therefore, if the Minister could set out the Treasury’s approach to enforcement and put at rest the minds of volunteers in sports clubs, assuring them that they will not be picked on in that way in future.

Is there not a stark contrast between how small clubs and large companies are treated? Not all large companies, but some, such as Vodafone, are allowed to walk away having not paid tax bills, which in some cases amount to billions of pounds, because they have done a cosy deal with HMRC, while small sports clubs and associations are being hammered by the same organisation.

Indeed. It is a proportionality issue. I am sure that HMRC does not engage in individual negotiation with the sports clubs about how much tax should be paid. The rules will be the rules, and the clubs will have to abide by them, but that does not seem to extend to large organisations for which some people feel there has been too cosy and conversational a set of circumstances to settle a tax bill. Things should be done by the rules, and the rules should be clear and enforced fairly.

I thank the hon. Gentleman for giving way, because that intervention may have been something of an own goal. Would the Labour Front-Bench team like to comment on the tax avoidance done today by the Labour party, on Mr John Mills’s £1.65 million donation of shares in his shopping channel company? We understand—it was reported in T he Daily Telegraph—that he was advised by the Labour party to avoid tax. Would the hon. Gentleman like to comment on that?

Order. Before the hon. Gentleman responds, I will say that I hope he will not be tempted to go too far down that line. He may make just some general remarks.

I would have loved to respond to the hon. Gentleman. I would dearly like to go into the issue at some length, but I have to abide by your strictures in all such matters, Mr Amess. I feel as though my latitude has been constrained. [ Interruption. ] I would be grateful if my hon. Friend the Member for Gateshead could find some way of working into the clause an ability for me to respond to the hon. Gentleman.

I am sad to report that this is my third Finance Bill, but I have only been here three years. [Laughter.] In those three Finance Bills, Government Members seem to have made huge stock of the capacity  of business to avoid tax. They seem to make it a virtuous matter: avoidance of tax is good for business. I have heard that time and again. I think that the right hon. Member for North Somerset (Dr Fox) made a particular virtue of avoiding tax. I am surprised at the attitude being shown now by Government Members.

This is a very important set of issues and in general I agree with the thrust of my hon. Friend’s comments. I know that in many subsequent Finance Bill Committees on which he will serve he will look to introduce new clauses and amendments on some of these issues. However, I think that it would be stretching your tolerance, Mr Amess, if we went too far beyond the issue of community amateur sports clubs.

May I help and bring some sunlight to the issue? If you will forgive me, Mr Amess, I would like briefly to indulge the Committee on this issue. I could not help but google the subject, and I just thought I could bring in what Mr Mills said, which may help to progress the argument. He said that the Labour party was very professional and incredibly understanding on this matter, and actually provided good guidance. Because I am intervening and so supposed to ask a question, do you think that this is an issue for the hon. Member for Nottingham East of falling off an incredibly high horse, or is this people in glass houses throwing boulders?

The hon. Gentleman asked you a question, Mr Amess—I do not know whether you wish to answer his inquiry of you. I would be delighted to get into some of these issues, were you able to allow me to do so. However, I suspect—

James Duddridge (Rochford and Southend East) (Con) rose—

I am answering the intervention of the hon. Member for Wolverhampton South West. I notice that he was quoting from an electronic device that he had in his hand—I wonder whether it was the web of the Whips’ notices.

No, it was The Telegraph website.

If the hon. Gentleman were able to send me the link to that particular article, I would find it incredibly useful.

Order. Before we continue with these exchanges, I remind the Committee to address remarks very carefully to the clause and the schedule that we are debating.

I hope that I can navigate an orderly way to discuss both the amendment and the donation from John Mills. Setting aside the issue of whether giving to the Labour party is a charitable or worthy cause—let us just assume that some people think that it might be—what would be the comparative tax advantages of giving directly to a charity or political  party? Perhaps the hon. Gentleman can compare and contrast the two for someone wanting to donate to a worthy cause.

I suspect that it would be stretching things a little, Mr Amess, to jimmy issues to do with political parties into our discussion of clause 45. However, I will try to find a way of doing so.

I have a second point to raise with the Minister about community amateur sports clubs—jesting aside, Mr Amess, I know that you will want me to focus on some of the issues. The provisions in schedule 20 make changes to the definition of what is known as the “open to the whole community” rule in respect of the tax treatment of some companies. The Minister is making changes to the definitions and descriptions of persons who may be affected. The Corporation Tax Act 2010 set out a definition of the “open to the whole community” rule, and there were a number of quite reasonable suggestions within that. A club is deemed open to the whole community for the purposes of this particular tax arrangement if

“its membership is open to all without discrimination…its facilities are available to members without discrimination, and…its fees…do not represent a significant obstacle to membership or use of its facilities.”

There are some ways in which the clause and schedule are seeking to finesse that arrangement, but the Minister’s substantial change is to delete a whole section on the meaning of the “open to the whole community” provision. Currently, the statute states that

“A club is not prevented from being ‘open to the whole community’ for the purposes” of the Act merely because it has different classes of memberships, depending on age, whether a member is a student, whether they are waged, or whether they live far from the club and so forth. In a sense, the legislation at present sets out how it is acceptable to delineate fees, for example, for different types of participants within a particular club. It essentially specifies where it is okay and not okay to distinguish between membership fees.

The new schedule—on page 116 of volume II, if hon. Members are interested in finding it—makes membership an open-ended question and leaves it entirely to the discretion of the club. It would now be able to discriminate in a wider array of areas. I am not sure of the genesis of that provision, because there must have been some complaint from sports clubs or others that the existing list of exemptions in legislation was not sufficient.

I am scratching my head and wondering why on earth the Government are making such a change. The only thing I can think of is that a club might want to charge different fees to different types of profession—perhaps a Member of Parliament. Perhaps they would get a discount or, more likely, be charged more for joining a community sports club. Other than things such as freemasonry membership, I cannot understand the rationale for the provision. I do not think the Government intend to allow sports clubs to give discounts just because someone went to Eton or Oxbridge. It is odd that the Minister has decided to sweep away the prescribed areas in legislation and allow greater latitude. That is my second point. Will the Minister explain exactly what is going on with that provision?

My third point is to do with the Treasury giving itself the power to alter the figure that allows clubs to remain exempt from UK trading income corporation tax. It is currently set at £30,000, and clubs need to be reassured that that threshold will not decrease. The property income corporation tax threshold is £20,000, and clubs need to feel safe and reassured that that threshold will not change either. I mention that because the Sport and Recreation Alliance has recommended that the trading income corporation tax and property corporation tax thresholds for which clubs can claim exemption should reflect the cost of living and should be increased by the retail prices index. I do not know whether that would be a good or a bad thing. Obviously there would be an impact on the Exchequer, so I could not commit to doing that, but it would help if the Minister could shed some light on that. Would there be a significant cost, and can he reassure organisations such as the Sport and Recreation Alliance, which are concerned about such points? Those are the issues that I have with the clause and the schedule, and I would be grateful if the Minister helped us with them.

I wish to make some brief remarks. I am particularly interested in community and amateur sports clubs, particularly in my own constituency. I had the pleasure of visiting the Llanrumney Phoenix boxing club in my constituency some months ago. I was pleased to go there to join in a bout of boxing and take part in the training session. It was a fantastic experience, apart from getting punched in the face by one of the young champions who was told, “No holds barred. Go for him.” However, it was a great experience.

I learned about the fantastic work that the volunteers were doing and the amount of work that goes into a small club. It relies heavily on voluntary support and has done for many years. It supports many hundreds of children across the constituency. One of the young members told me that he had lost two stone by taking part. He had stopped eating junk food and had done an amazing amount of work. I should follow his example.

More seriously, when I read the schedule brought about by clause 45 I was struck by the complexity of the detail, including provisions about what constitutes full participation in a club’s activities and provisions for different costs. There is incredible complexity that will increase the additional burdens on many voluntary organisations. I am not suggesting that anybody should not be paying the taxes that they ought to.

May I draw the hon. Gentleman’s attention to the potential complexity in the statutory instruments that the schedule will require?

Indeed, there is incredible complexity there. What support do Ministers propose to give to small voluntary organisations, such as the Llanrumney Phoenix boxing club, to help them comply, particularly in the context of the Government cutting HMRC advice centres and face-to-face advice? That will cause enough problems for individuals filing their tax returns. What support is being given, particularly given that such organisations rely so much on that voluntary support? Will Ministers provide some help and reassurance to  clubs such as Llanrumney Phoenix boxing club and the many other amateur sports organisations that I am sure are in all Committee members’ constituencies?

On looking at clause 45, I was lulled into a false sense of security. Committee members might ask, what could be better on a 42nd birthday than to enjoy a clause of such brevity?

Happy birthday!

Thank you. However, turning to schedule 20, I was astonished to discover that it took a page to describe the meaning of

“open to the whole community”,

a page and a half to describe the meaning of

“organised on an amateur basis” and so on. I am delighted that the hon. Member for Cardiff South and Penarth and I agree that there is a great deal of complexity here and, no doubt, in statutory instruments in due course. If I am annoying the Whip, perhaps he might ensure that I am on the Committee considering the statutory instruments. I would quite like to see this regulation through from one end to the other.

If the clause and schedule stand for anything, it is for a clarion call for tax simplification. It is clear that, contrary to what the hon. Gentleman said, we cannot afford to set up offices to support sports clubs’ compliance with regulations that are supposed to help them by lowering taxes. The cycle of complexity has gone far enough. The schedule shows that, next time round, the Government might have to consider how to simplify the whole business.

Mr Amess, it is a pleasure to welcome you back to the Chair and to serve under your chairmanship. I thank all Members for their comments, including the hon. Member for Nottingham East, speaking for the Opposition. I hope that I can answer some of the good points that have been raised.

Clause 45 introduces schedule 20, which amends the conditions that a sports club must meet to be registered as a community amateur sports club, usually referred to as a CASC. The schedule contains a number of powers to make regulations. The detailed conditions will be specified in regulations, after the public consultation that started on Monday 3 June. The powers in the schedule are fairly wide-ranging, but I shall expand on the good reasons for the schedule’s drafting.

By way of background, the CASC scheme was introduced in 2002 to provide a number of charity-type tax reliefs to support local amateur sports clubs. To access those tax reliefs, clubs must meet certain eligibility requirements. They must also register with HMRC. HMRC recently reviewed the legislation and found it unclear. I announced on 4 March that the Government would introduce legislation in Finance Bill to clarify the intent of the scheme. Schedule 20 amends the eligibility requirements for CASCs and includes powers to make further detailed changes through regulations.

We are not making the changes lightly. If we did nothing, HMRC would be required to apply the law, meaning that in many cases many CASCs would no longer qualify for the scheme. I do not want that to happen and I am sure that Committee members agree.

The hon. Member for Nottingham East mentioned a story that he read in the Daily Mail. I am pleased that he reads the Daily Mail; I read it and I like it, particularly when it highlights the damage done to our country by the previous Labour Government—[Interruption.] It is in there every day.

The hon. Gentleman referred to a recent story on an HMRC project investigating amateur cricket clubs. I should make it clear that I have talked to HMRC about that, and that investigation is unconnected to CASCs; it is on risk-based compliance activity, to ensure that employers are correctly operating a payroll system so that everyone pays the right amount of tax. Therefore, if he was referring to the same story that I read, I reassure him that that is not to do with the CASC regulations.

Schedule 20 contains new powers to make regulations. Although the draft regulations are not yet available, there are very good reasons for that. We needed to bring in detailed rules as quickly as possible to give certainty to clubs, but the sports sector is diverse and a set of rules for one sport may not work for another. HMRC is working closely with the Sport and Recreation Alliance to understand the implications of the CASC rules. I am grateful to the SRA for all the work it has done, and continues to do, with HMRC.

The SRA agrees that a proper consultation for the whole sector is essential before detailed rules are brought in. Normally, HMRC would consult before draft legislation is published, and that legislation would be brought forward in next year’s Finance Bill, but clubs cannot wait that long for certainty. The schedule therefore brings in powers to amend and clarify the eligibility conditions through regulations.

HMRC published a consultation document on Monday, which contains detailed proposals for the new conditions. The consultation will end on 12 August and the draft regulations will be published in the autumn. The new rules, therefore, should be in force by early next year. The draft regulations will be subject to the usual parliamentary process under the draft affirmative procedure; that is the most effective way to bring in the rules as quickly as possible.

The schedule makes changes to the eligibility conditions and provides for more detailed rules to be made through regulations. The hon. Gentleman rightly raised the issue that, to benefit from the CASC rules, clubs must be open to the whole community. We are looking at that carefully in the consultation. To join the CASC scheme, a club must be open to the whole community and the cost to an individual to join that club must not represent a significant obstacle either to membership or to participation in the relevant sport.

The schedule allows a limit to be set on the total amount that a club can charge a member to participate in a sport, but clubs with high costs will still be able to qualify for the CASC scheme. In such cases, all that those clubs need to do is to make suitable arrangements for everyone in the community to participate to the maximum amount if they cannot afford the club’s high costs; for example, a sliding scale of costs could be introduced based on an individual’s ability to pay.

The schedule introduces powers to make regulations specifying in more detail when a club is organised on an amateur basis. It also allows clubs to make limited  payments to people to play for them. That is to recognise that, while it is important to maintain the amateur nature of the scheme, having a famous player can inspire others within a club. The consultation sets out proposals that explore that issue further. The schedule also allows clubs to pay subsistence payments to members as well as their travelling expenses, which is currently not allowed.

I now turn to the main purpose of the provisions on sporting facilities and encouraging participation in sport. The generous tax reliefs available to CASCs are to support sports clubs. They are not there to support social clubs with some kind of sporting activity as an annexe. Schedule 20 introduces powers to define what is sporting and non-sporting income. It also introduces powers to limit certain types of non-sporting income, for example, significant income from social events not involving sporting activity.

The Government accept that CASCs should be able to generate income from members. We want to encourage clubs to raise more funds so that they can reduce their membership costs. Some CASCs raise income from offering services to members of the public, for example through bars and restaurants. It would not be fair to support CASCs at the expense of other local businesses that do not get favourable tax treatment. The consultation is seeking views on how to achieve a balance, enabling CASCs to raise funds without affecting the local business community.

Schedule 20 also introduces powers to set limits on the proportion of non-sporting members a CASC may have. CASCs are generally exempt from corporation tax, but there are limits on the amount of trading income and property income that they can receive. Schedule 20 contains powers to change those limits. The consultation puts forward proposals to increase those amounts.

HMRC is consulting on the details of the powers that I have mentioned. I hope that as many people as possible contribute to the consultation, which has a closing date of 12 August. As I said, I expect the draft regulations to be laid in the autumn under the draft affirmative procedure. That will give the House an opportunity to scrutinise the detailed rules that emerge from the consultation.

It is possible that, as a result of the detailed procedural rule changes, a small number of existing CASCs may need to make changes to the way they currently operate if they want to stay as a CASC and benefit from the reliefs that they get. CASCs would not need to make any changes until the regulations are made, but affected clubs might want to start putting changes in place when the draft regulations are laid in the autumn.

HMRC stockpiled some applications for registration while it was carrying out its review of the CASC rules. Those applications were from clubs that would not meet the strict interpretation of the current law. I know that several hon. Members have been contacted by local clubs in their constituencies whose applications are currently stockpiled. I am sorry for the delay that the clubs have experienced but I hope that hon. Members will agree with me that it is important to get the rules right first. HMRC is contacting clubs whose applications have been put on hold to explain how the new rules will  affect each one. HMRC aims to register as many CASCs as possible during the consultation period. Some clubs with high levels of non-sporting income may need to reorganise their affairs in order to remain a CASC.

One way to do that might be to set up a separate trading subsidiary, as many charities currently do. The subsidiary then donates its profits to the charity under company gift aid but, unlike company gifts to charities, there is no tax relief on company gifts to CASCs. We are therefore consulting on whether subsidiary companies that are wholly owned by the CASC should be able to donate their profits to a CASC under company gift aid. If that measure is taken forward it will be legislated for in next year’s Finance Bill.

Before I conclude, Mr Amess, I would like to turn a similar point that was raised by the hon. Member for Cardiff South and Penarth and by my hon. Friend the Member for Wycombe—I wish him happy birthday, by the way. [Hon. Members: “Hear, hear!”] They both rightly and understandably raised the issue of potential complexity.

I would point out what I think is key. The reason we are in this position in the first place is that the exiting rules were well intended but not clear. That caused confusion that led to the current situation. The Government have decided to amend the rules, which unfortunately requires legislation, though in a way that will hopefully be supported by the sporting community. The co-operation we have received so far has certainly been very welcome. Since my ministerial statement on 4 March, the feedback from the sporting community and local sporting associations in particular has been very positive and supportive of the Government’s approach, which in many cases should lead to a more flexible outcome for local sporting charities.

The Government are committed to delivering and maintaining a real sporting legacy after the London 2012 Olympic and Paralympic success. An important part of securing that legacy is encouraging greater participation in sport at amateur level. The Government recognise the importance and value of CASCs. I hope that, as well as providing certainty for existing CASCs, the changes will encourage more clubs to apply and qualify for CASC status. I therefore recommend that the clause and schedule stand part of the Bill.

I join everyone else in wishing Mr Baker a happy birthday, but we must refrain from singing “Happy Birthday”.

Question put and agreed to.

Clause 45 accordingly ordered to stand part of the Bill.

Schedule 20 agreed to.