Charities Bill [HL]

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, 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.