Charity Tax Group’s work in 2020: Review of the year so far

CTG continues to play an active role in shaping policy development and representing charities’ interests to HMRC and HM Treasury.

February

CTG  published a letter that was sent to the Chancellor, outlining representations on a range of tax issues, in advance of Budget 2020. In the submission, CTG called on the Government to:

  • Commit to a strategic review of the future VAT system with the aim of reducing the irrecoverable VAT charities currently incur
  • Confirm that digital advertising by charities is eligible for a VAT zero rate within the current law
  • Extend VAT zero rating to electronic publications produced and purchased by charities
  • Prioritise resolution of discussions between HMRC and Facebook approving  Gift Aid claims on donations received by Facebook (and other fundraising platforms) 
  • Increase the non-primary purpose trading limit (miscellaneous income) from £80k
  • Confirm that the forthcoming review of business rates in England will protect existing charitable reliefs
  • Consider tax credits to stimulate the funding of bio-medical research by charities, similar to those provided to investor owned research companies
  • Commit to no further increases in Insurance Premium Tax (IPT) for charities and consider targeted relief where the insurance is required for activities or premises directly related to a charity’s objects
  • Allow Apprenticeship Levy funds to be used towards the costs of training volunteers.

Following a Government reshuffle, a new Chancellor and Exchequer Secretary to the Treasury were appointed. CTG participated in a meeting of the HMRC Charity Tax Forum, liaising with officials on a range of topical issues including 5MLD/Trust Registration Service and charity tax returns.

The Government published updated guidance on the Employment Allowance – from April 2020 access to the Employment Allowance for a tax year will be restricted to employers with secondary Class 1 NIC liabilities below £100,000 in the previous tax year. The income will be operated as de minimis State Aid.

Following the News Corp case, HMRC issued a briefing confirming that the VAT treatment of digital newspapers and related publications had not changed.

The Government announced that off-payroll working rules will now apply only to payments made for services provided on or after 6 April 2020. The Government also published its response to its review of changes to the off-payroll working rules.

CTG’s Gift Aid working group met and discussed topical issues including Facebook Donate, data protection, donor education and retail Gift Aid. The Future of Gift Aid working group also met representatives from HMRC and the payments and intermediaries sectors to review a “proof of concept” on automating Gift Aid processes and harnessing the power of digital technology, Open Banking and HMRC Personal Tax Accounts.

January

Charities welcomed confirmation from HMRC that, following representations by CTG and others, charitable trusts would not be required to register with the Trust Registration Service as they were a low risk of money laundering and terrorist financing. This has saved significant work for many charities.

The Government published a review into the implementation of new off-payroll working rules from April 2020. CTG was invited to participate in a stakeholder roundtable meeting at HM Treasury and highlighted practical issues facing charities, calling for a soft-landing period in terms of compliance. HMRC also published draft legislation on implementing these rules.

CTG worked closely with charities and agencies to consider a potential challenge to HMRC’s view on the the VAT treatment of social media advertising.

Members of CTG’s Future of Gift Aid working group discussed a “proof of concept” proposal with HMRC’s innovation team – the proposal is to future proof the payments architecture and HMRC systems to allow for greater automation of Gift Aid in future.

At the end of the month, the Welsh Government published a consultation on the appropriateness of charitable rates relief for private schools and hospitals.

A detailed re-cap of charity tax news, consultations and commentaries that took place in January can be found here, including updates on the Employment Allowance, Retail Discount and VAT and e-publications.