What did the Charity Tax Group do for charities in 2018?

2018 was a very busy year with CTG making representations on behalf of charities on a range of developing tax issues. To keep track of developments in 2019, ensure that you are registered for the CTG newsletter here.

What did CTG do last year?   Why is this important for charities?
1) Led negotiations with HMRC challenging the VAT treatment of online charity advertising consulting charities and taking expert counsel’s opinion. Charities face an additional 20% cost on their advertising bill due to HMRC’s position – potentially millions of pounds are at stake.
2) Secured important successes in the 2018 Budget including:

  • An increase in the Gift Aid Small Donations Scheme (GASDS) donation to £30.
  • Reduction in the frequency of letters that need to be sent to donors’ using the Retail Gift Aid scheme.
  • An increase in the small trading exemption threshold from £50k to £80k per annum.
  • Protection of the charity exemption from the Community Infrastructure Levy (CIL)

All of these proposals were raised directly with the Minister at CTG’s Annual Tax Conference.

It shows that the Government is willing to introduced targeted, administrative changes that will simplify the tax system for charities and donors and reduce costs. CTG has built a positive relationship with the Minister responsible for charity taxation and will be pushing for a much broader review of the administrative and financial burdens facing charities, principally the obstacles caused by the distortions in the VAT system.








3) Grew the Gift Aid working group to over 80 charities and established it as:

  • A vehicle to share best practice and maximise their eligible Gift Aid claims.
  • A vital sounding board for HMRC and HMT officials on emerging issues including proposed changes to fundraising materials and Gift Aid declarations.
Working group members have been able to improve their Gift Aid processes, resulting in £millions of additional relief being claimed. Feedback from the working group has helped to ensure HMRC does not introduce onerous and poorly targeted compliance requirements, saving significant charity resources.




4) Produced detailed analysis for members on HMRC’s new VAT guidance on grants. CTG has also worked with HMRC on important VAT guidance on sponsorship and the zero rating of medical and veterinary equipment. The VAT treatment of grants and contracts has always caused major uncertainty for charities. The new guidance provides important clarity saving charities time and money.



5) Persuaded the Minister not to impose a blanket ban on Gift Aid fees charged by intermediaries. The Minister requested a meeting with CTG to discuss the relationship between charities and intermediaries and we argued that sector led dialogue was the best approach. A Government ban on Gift Aid fees could have resulted in higher fees on processing donations, a lower quality of service or complete removal of the Gift Aid service.




6) Active discussions with HMRC on the potential implementation of a reduced VAT rate for e-publications after the European Council ruled this was permissible. A reduced VAT rate would result in major savings for charities, given the increase in e-communications with donors and beneficiaries.


7) Worked closely with HMRC to clarify the implications of Making Tax Digital (MTD) for charities, including securing important improvements to the VAT Notice. Implementing MTD will be a major challenge for many charities in 2019, and it is crucial that charities are prepared and informed of their new reporting obligations.


8) Played a leading advisory role to the Charity Tax Commission and submitted a detailed response to the consultation following feedback from members. The Commission will make recommendations on the future of the tax system. It is an important opportunity to highlight financial and administrative burdens that charities face.
9) Responded to consultations on business rates in England, Scotland and Wales, highlighting the importance of mandatory reliefs and the need for proportionate and targeted anti-avoidance measures. Business rates relief is very important to charities and facing growing scrutiny. It is vitally important that charities defend and maintain the integrity of mandatory reliefs.


10) Provided expert commentaries on the implications for charities of a wide range of case law judgments on issues including VAT, Gift Aid and business rates. Keeping on top of case law developments is crucial for charities to ensure they are compliant with the tax system, but also identify opportunities to access reliefs and exemptions.