The Minister referred to some of the changes in the previous clause, which put existing practice on a statutory footing. In essence, my understanding is that in defining a “community amateur sports club”, clause 52 also puts current practice on a statutory footing. The five qualifying conditions listed in proposed new section 658 of the Corporation Tax Act 2010 will be divided into two groups. A CASC will be required to include the first three conditions in its constitution and to meet them in practice, and to meet the other two conditions in practice. I understand that that is because it would be difficult to write some of the conditions into a constitution.
I have one question for the Minister and again, in order to be brief, I will not go through various points on the guidance—suffice it to say that fairly extensive guidance is attached, including various terms of reference, and guidance on what constitutes locations, management conditions, eligible sports, and so on. Will the Minister say whether the guidance needs to be revised in light of the changes that are being made, or will it continue to apply after those changes have been made?
The clause’s explanatory notes are scanty in detail, but there are important issues in defining community amateur sports clubs, in terms of potential or ongoing clashes with HMRC. As we are legislating for that now, I want to check the exact situation.
The first point relates to miners’ welfare clubs under the auspices of the Coal Industry Social Welfare Organisation, which is defined as a charity in its own way, and therefore has to abide by the various rules of the Charity Commission. The essence of miners’ welfare clubs is that they are predominantly sports clubs, but they are also social entertainment clubs with a bar. There is often a conflict in relation to HMRC in that context, but if that remains the case, it is absurd. In essence, for a period of time, such clubs were perhaps defined as drinking clubs, but in the past five years in particular, they have returned to their historical tradition of primarily being sports clubs, involving many people in the community.
The problem, and I suspect that it may affect other sports clubs too, is that membership is by nomination and election. In theory, one can be turned down for membership, or one can be expelled from membership of a miners’ welfare club. To use an example, someone who commits unacceptable acts—let us call them acts of drunken rage and violence—could well be excluded from the club. If they are, it would be absurd for the club to be defined, in terms of sport, as not open to all the public. The issue of membership that is open, but controlled in this case by charity law, and the potential contradiction with the CASC model, is one that it is vital to correct.
My second point may overlap with the first, but it certainly has different variations, and relates to the fact that the club has a bar. Where a sports club determines that it will have a clubhouse—an aspiration of most sports clubs in my area—and manages to get a bar, some conflict about the definition of membership re-emerges. Membership for the bar will be for people aged 18 and over, but membership of the sports club will be open to everybody, certainly including all under-18s. Again, that seems to have caused some problems for HMRC.
I want confirmation from the Minister either that such issues have been sorted out, or, if they are still emerging, that it is the Government’s intent that such bureaucratic obstacles should not prevent those clubs from becoming community amateur sports clubs. In areas such as mine, the incredible growth in sport over the past five or six years is due to the fact that the old miners’ welfares have become modern miners’ welfares, and they are, in traditional style, getting vast numbers of young people playing a full range of sports. Without question, the fastest growth of sport across the north of England is through those clubs. They should be able to benefit, if they wish, from the CASC model, but I fear that complications remain.
I will try to keep these points fairly brief because we are dealing with a fairly limited point in the legislation. Let me begin by dealing with what I can of the points raised by the two Opposition Members. I shall answer them in broad terms and then move on.
First, HMRC and the Government are strongly committed to the CASC model. We think it has many benefits and of course in this Olympic year we all particularly recognise that. I am aware of issues with the Charity Commission ruling, and HMRC is going through and looking at the points that have emerged from that. It is holding discussions with stakeholders. Let me perhaps give the hon. Member for Bassetlaw one of the friendlier responses he has received in Committee and say that I would be delighted to hear from the organisations to which he refers with their views on what helps them best.
CASCs should do what they say on the tin. They need to be community. They need to be amateur. They need to be for sports. They also need to be a club. Let me deal with the point raised by the hon. Member for Kilmarnock and Loudoun about the rules for membership subscriptions. Again, these clubs are community clubs. When it comes to things like gift aid, there are restrictions on what it can be applied to. It cannot apply to something that then provides a benefit in return, and in some cases membership can be interpreted in that way, where it is most often paid for personal use of facilities. It is not necessarily appropriate to extend gift aid there. Again, on the general point that she and the hon. Member for Bassetlaw raised, various issues are being looked into around the broader points of CASCs.
Moving swiftly on, let me turn to the changes that clause 52 makes. It makes changes in two particular areas. The clause ensures that CASCs do not need to amend their constitutions to include extra conditions covering location and management in order to retain their access to the favourable tax regime that is provided under the CASC scheme. Let me now provide some background. This is what I began referring to when I told the hon. Member for Newcastle upon Tyne North that I would have to answer across clauses 51 and 52. These rules relate to a change in the Finance Act 2010 when the special tax rules for charities and CASCs were extended to qualifying organisations in Europe.
An amateur sports club is entitled to be registered as a CASC if it satisfies certain conditions. The 2010 legislation introduced two extra conditions. Firstly, the location condition requires a club to be based in the European Union, Iceland or Norway. Secondly, the management condition requires the club to be run by people who are fit and proper persons. The two new conditions were drafted in a way that requires CASCs to include those conditions in their constitutions. But this was never the intention. While we expect all registered CASCs to satisfy these conditions in practice, it does not need to be a requirement under their club constitution. There is a fairly common-sense case to be made here. If the new CASC scheme rules were operated strictly in accordance with the law, then all existing CASCs would need to amend their constitutions to include extra conditions to maintain their CASC status. Clearly that would be an unnecessary and very significant administrative burden for more than 6,000 clubs.
Since the problem came to light late last year, HMRC has continued to register CASCs on a concessionary basis. This change will put HMRC’s operational practice on to a statutory basis. It will ensure that all registered CASCs continue to qualify under the scheme, without needing to amend their constitutions. As I said on clause 51, CASCs themselves will not notice a great deal of difference as a result of this clause as they may well have been unaware of the requirement to include the new conditions in their constitutions. I am keen to make these changes now to put HMRC’s operational practice on to a statutory basis.
It is important to reiterate the Government’s support for the CASC scheme in this Olympic and Paralympic year. The CASC scheme allows generous tax reliefs to more than 6,000 qualifying sports clubs. The clause ensures that those clubs can continue to benefit from the CASC rules without incurring an unnecessary administrative burden. It makes changes in line with what was introduced in the Finance Act 2010.