CTG Newsletter – 1 February 2017
Register for the CTG Annual Conference (28 March 2017)
Financial Secretary to the Treasury (FST), Jane Ellison MP, will give the keynote speech at this year’s CTG Conference, which will take place at the Wellcome Trust, on 28 March 2017. Attendance at the event is free for charities and CTG Observer Members (up to two representatives per organisation). There are now fewer than 50 tickets remaining so register here today to avoid missing out!
Making Tax Digital
HMRC has published a Summary of Responses to its consultation on Bringing business tax into the digital age as part of the Making Tax Digital reforms. CTG’s response to the MTD consultation called for charities to be exempt from reporting and record-keeping requirements, while providing support for charities better able to comply to voluntarily opt-in.
Crucially, the Government has confirmed that it agrees and will therefore introduce legislation to exempt charities from the Making Tax Digital requirements. This is a welcome and pragmatic decision that will protect smaller charities and those with limited digital capability.
However, it is important to note that charities are simply exempt from these new reporting requirements and we are seeking clarification from officials on the process for charities managing their existing ongoing tax reporting requirements, including the submission of nil-returns. Other online reporting mechanisms, for example for the Apprenticeship Levy (where relevant), PAYE and Charities Online, will continue to be in a digital form, and we await further guidance on the interplay between this and Making Tax Digital.
At the same time, the Government has decided that charity trading subsidiaries should be within the scope of the Making Tax Digital obligations. CTG had called for trading subsidiaries to be included within the exemption as a charity will often use a subsidiary to make its activities tax effective or to accommodate any trading activities. This is often a requirement dictated by administrative, legal and financial practicalities. The charity is responsible for the administration of the subsidiary and processes and staff resources will often be shared across the organisation. Therefore, if a charity subsidiary was required to comply with these rules, it would mean that the charity would have to operate two systems (which adds complexity) or consider maintaining digital records for the whole charity group, undermining the proposed exemption. CTG also questions how this will work with a charity registered with its subsidiary in a VAT group, with potential for extra complexity. CTG will be looking to raise these concerns again with officials.
If the decision is taken to require charity trading subsidiaries to maintain digital records and update HMRC at least quarterly, CTG believes it would be sensible to introduce some form of transitional period and consider a size threshold to protect smaller organisations.
Holding companies are required to raise management fees in order to ensure VAT recovery
Dermot Rafferty, Senior Manager at EY, reviews the recent case MVM (C-28/16). He recommends that holding companies who are involved in the management of their subsidiaries effectively charge the members of the group for the management services. you can read the full commentary here.
New Gift Aid guidance for intermediaries
From 6 April 2017, donors can give intermediaries the authority to create Gift Aid declarations on their donations for the rest of the tax year. HMRC has published new guidance for intermediaries here. In practical terms there will be no immediate implications for charities unless they operate their own intermediary platform. However, we would welcome feedback from charities over the next year on their experiences of the new rules and any change in approach from third party intermediaries. Further information can be found here.
Charities should make sure that they and their third-party intermediaries are compliant with HMRC’s guidance on Gift Aid and digital giving, which was updated in April 2016. Importantly the guidance reminds users that the general rule still applies: that donors must only claim Gift Aid when donating their own money when using social giving opportunities.
Apprenticeship Levy
The Institute for Fiscal Studies has published a report on apprenticeships, suggesting that the Apprenticeship Levy policy is neither a proportionate response to the need for better skills training in the UK, nor likely to create the sort of returns that have been suggested by the Government.
Consultations tracker
CTG will be preparing responses to a number of important consultations over the next few months. Our consultation responses rely on input from members and we would encourage you to send us your thoughts, and where relevant submit your own consultation response. The deadlines for forthcoming consultations are outlined below. Please send your feedback via the relevant consultation page on the CTG website or to info@charitytaxgroup.org.uk.
You can also read CTG’s recent pre-Budget submission here.
CTG Newsletter Archive
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CTG Commentaries
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