§ Mr. Pendry
I beg to move amendment No. 96, in page 17 [Clause 43], leave out lines 1 to 5, and insert—'43.-(1) Section 5(3) of the 1976 Act (conditions that must be satisfied for a society's lottery not to be unlawful) shall be amended as follows.(2) In paragraph (b) (registration of a society with the Gaming Board), after "society" shall be inserted "or a connected company to that society".(3) In paragraph (c) (promotion in accordance with approved scheme), after "society" shall be inserted 'or a connected company to that society".(4) Paragraph (d)'(lottery scheme to be registered with the Gaming Board if the total value of tickets or chances to be sold in the lottery is more than £10,000) and the word "and" immediately preceding it shall be omitted.'.It is clearly established in charity and tax law that lottery promotion is a trading activity. Consequently, charities undertake lotteries through connected companies 1094 controlled by them. Existing small lottery legislation, however, does not allow the Gaming Board to register the connected companies of charities to run lotteries. It allows only for the registration of the charities themselves. Charity, tax and small lottery law are thus incompatible, and the Bill gives the Government an opportunity to remedy that. We understand that Gaming Board practice until recently has been—sensibly—to register the connected companies of charities to run lotteries. In the past few weeks, however, some charity trading companies have had their registration requests refused.
We do not believe that it is deliberate Government policy to impose further tax liability on charities, but we should like clarification that the Government intend to amend the law. If charities are unable to run lotteries through their connected companies, and must pay tax on their small lottery proceeds, it will greatly reduce the value of small charitable lotteries and provide a further disincentive to charities to run lotteries, thus reducing their income.
As we have made clear, we are concerned about the impact that the national lottery could have on charitable income. Therefore, we welcome measures in part III which are aimed at securing charity income for small lotteries, although we think that the Government could go further. The amendment is compatible with the intention of part III. It is vital that the law be tidied up so that charities are not threatened with additional tax liability. We hope that the Government will accept the spirit of the amendement and will assure us that they will consider the matter and remedy the situation.
§ Mr. Alan Howarth
At this time of night, I shall say only on the substance of the amendment that the hon. Gentleman's arguments and their purpose are absolutely right. If my hon. Friend the Minister has not already discovered that there are insuperable technical difficulties, I hope that he will do his best to persuade my right hon. Friend the Chancellor to support the proposals. The arguments that we have considered in relation to the amendment reinforce my view on Second Reading that it would be sensible for the Gaming Board to regulate all lotteries.
§ Mr. Peter Lloyd
If I understand correctly, the purpose of the amendment is to enable a wholly owned trading company of a charity to promote lotteries on behalf of that charity. That is already possible, and I shall explain. Contrary to what the hon. Member for Stalybridge and Hyde (Mr. Pendry) has been told by some of his contacts, the Gaming Board has not turned down requests for registration. It suspended consideration of applications for two or three weeks while the law was clarified. Under the Lotteries and Amusements Act 1976, it is possible for wholly owned subsidiaries to be registered as charities and to conduct lotteries. There is no problem.
§ Mr. Pendry
I am happy to have that assurance. I am sure that what the Minister has said is absolutely correct. beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.