Clause 56
Finance (No.2) Bill
10:30 am
Paul Goodman (Shadow Minister (Childcare), Treasury; Wycombe, Conservative)
It is a pleasure to see you in the Chair this morning, Mr. O’Hara. When we considered clause 54, the Paymaster General was keen to say that she would be happy to examine any examples of difficulties caused by these clauses to charities or institutions. I have been given such an example, upon which amendment No. 92 hangs. I shall put it to the Paymaster General to hear her response.
The clause as drafted requires the primary purpose and non-primary purpose of a charity to be divided into two separate traits. One might reasonably infer from that division that the expenditure apportioned to the non-primary purpose would be non-charitable expenditure. However, the argument has been put to me that such expenditure might be for the charity’s benefit—not simply for tax avoidance—without being exclusively for the charity’s purposes.
I come to the example. Let us suppose that a university college seeks to mitigate losses on its primary purpose trade—providing services to students—by undertaking catering and conferencing. Unless the amendment is accepted, colleges in which catering and conferencing are small-scale—that is, colleges that do not trade through a wholly-owned subsidiary—and many smaller and less financially sophisticated charities might find themselves at risk of challenge by a tax inspector. I should be interested to hear the Paymaster General’s response to the amendment.