CTG Newsletter – 12 September 2017

Budget representations

CTG is in the process of preparing its pre-Budget submission, the deadline for which is 22 September 2017 (more details here). We are reliant on feedback from charities and Observer Members so please let us know if you have any relevant proposals or concerns to flag to the Treasury.

Finance Bill

Finance Bill No.2 2017 has been published as well as accompanying explanatory notes. Full details are available here.

Measures include new penalties for those who enable the use of tax avoidance schemes that are later defeated by HMRC and changes to prevent individuals from using artificial schemes to avoid paying the tax they owe on their earnings. The Bill also legislates for a number of policies of particular interest to many charities including SITR, the Museum and Galleries Tax Relief and MTD for VAT.

Charities should also be aware of the introduction of a new penalty for participating in VAT fraud.

Round-up of topical issues

• HMRC Stakeholder Conference: CTG’s Chairman, John Hemming, is attending this afternoon’s HMRC stakeholder Conference. You can follow updates from the meeting using the hashtag #HMRCconf. The session will include updates from HMRC on plans for Making Tax Digital.
• Donations through Facebook: Facebook has announced that it will be launching charity fundraising tools in 16 European countries, including the UK, that will allow people to donate directly on social media pages through donate buttons inserted into page headers or posts, such as videos, photos or text. Charities will be charged a 5 per cent fee on each donation: 3.5 per cent of the donation will cover the costs of vetting charities, operational costs and payment support, and 1.5 per cent will cover payment processing (although fees are to be  waived on donations made to European charities until October 29 2017) . Gift Aid will be possible for eligible donations. Find out more here.
• List of ESCs updated: HMRC has updated VAT Notice 48: Extra Statutory Concessions, which gives details of all HMRC Extra Statutory Concessions (ESCs) in force at the time of publication, as well as those that are now obsolete. Further information, including summaries of ESCs still available to charities can be found here.
• VAT Education Manual updated following Brockenhurst: HMRC’s VAT Education Manual 53400 relates to Group 6 Item 4: Closely related goods and services sold to third parties. This updated guidance explains the HMRC’s position following the Brockenhurst College case (C-699/15).  Revenue & Customs Brief 39/14 is hereby cancelled. CTG Technical Advisor Graham Elliott has written a commentary on the case here.
• Gift Aid donor benefits consultation process: Officials from HMRC have told us, “The summary of responses to the last consultation on donor benefits is currently being drafted. It is too early to say when this document will be published as it is subject to Government priorities and budget announcements. We will update you further as soon as we’re able to say more”.
• Brexit: The EU (Withdrawal) Bill (formerly known as the Great Repeal Bill) passed Second Reading in the House of Commons on 11 September 2017. Separately the Lords Constitution Committee has issued an interim report on the Bill, and called for the Government to act on the Committee’s criticism of the ‘unprecedented’ transfer of powers from Parliament to Government, proposed in the Bill.
• Plastic bag “tax”: Tesco has been criticised by Mary Creagh MP, chair of the environmental audit committee, for not donating all of the money raised from the sale of disposable plastic bags to charities, using some of it to cover administrative costs.
• PAYE: HMRC guidance for employers running payroll: What payroll information to report to HMRC has been updated, although unfortunately it is unclear what specific changes/updated have been made.
• Audit reports: Analysis by the Charity Commission has found that in the year ending 31 December 2016, 97 charities filed accounts that included a formally modified audit opinion. This is an auditor’s statement that the accounts are, or could be, materially misstated, perhaps because there were gaps in the evidence that supported the accounts.
• Guidance on becoming a training provider/employer for the Apprenticeship Service: The Education and Skills Funding Agency has published new guidance summarising how organisations can register and use the apprenticeship service as a training provider as well as updated guidance for employers using the service. Further information can be found here.
• Parliamentary question on VAT and charities: Conservative MP Jo Churchill has asked the Treasury to estimate the rate of VAT collected from accident rescue charities in the last 12 months. We will report the answer to members once published.

CTG Newsletter Archive

Members can catch up on CTG’s recent newsletters using the links below:

• CTG Newsletter – 6 September 2017
• CTG Newsletter – 29 August 2017
• CTG Newsletter – 22 August 2017
• CTG Newsletter – 17 August 2017
• CTG Newsletter – 9 August 2017

CTG Commentaries

Read our expert commentary pieces and leave your comments and queries:

• Is a CASC a Charity (for Tax Purposes)? (Graham Elliott)
• Charity VAT Recovery – The Road Not Taken (Graham Elliott)
• Iberdrola VAT case – A dilution of Sveda? (Dermot Rafferty)
• VAT recovery for holding companies – MVM case and HMRC guidance (Dermot Rafferty)
• Professional negligence and failed tax avoidance schemes (Sonia Ferreira)
• Definition of a ‘sport’ for VAT purposes – new AG opinion (Graham Elliott)
• Business rates valuations for museums (Colin Hunter)
• First experience of submitting a Common Reporting Standard (CRS) return (CTG)
• Construction of Relevant Charitable Purpose (RCP) buildings – position of sub-contractors (Les Howard)
• Supplies to local authorities – Healthwatch Hampshire VAT case (Graham Elliott)
• Brockenhurst College VAT case – implications for charities (Graham Elliott)
• Filing charity trading subsidiary tax returns and charity accounts (Justin Bevan)
• Adecco appeal on the VAT treatment of temporary workers dismissed (Graham Elliott)
• AG Opinions on the VAT cost-sharing exemption – implications for charities (Graham Elliott)
• Have you paid enough tax to cover your Gift Aid donations? (Kevin Russell)
• Off-payroll working: Major changes from April 2017 (Susan Ball)
• Update on “Economic Activity” and the fate of the Lord Fisher test (Graham Elliott)
• Durham Cathedral VAT case and Sveda – implications for charities (Graham Elliott)
• Hire fees for stalls at fairs – implications of the Kati Zombory-Moldovan case (Graham Elliott)
• Common Reporting Standard – Top 10 tips for charities (Alana Petraske)
• Charity Authorised Investment Fund (CAIF) launched (Grania Baird)
• Longridge on the Thames VAT case – implications for charities (Graham Elliott)
• Implications of Brexit for charity tax (John Hemming)
• Implications of the Hallé case for the philanthropic exemption (Graham Elliott)
• Helping you find your way – the new Charity Tax Group website (John Hemming)

Please contact us at info@charitytaxgroup.org.uk if you would be interested in contributing a commentary piece.

Website, newsletters and supporting CTG

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CTG relies on donations from its charity members to fund the work it does on behalf of the sector. If your organisation has not yet made a contribution to our work in 2017, please consider doing so – further information and a donation form can be found here.