CTG Newsletter – 14 November 2017
HMRC Trusts Registration Service – registration deadline extended for new trusts
Following feedback from agents and stakeholders HMRC has announced that the Trust Registration Service (TRS) deadline for new trusts has been extended from 5 October 2017 to 5 January 2018. This extension is only for the first year of the TRS. The deadline for existing trusts to register on the TRS will remain unchanged at 31 January 2018. The TRS is a new service that will provide a single online route for trusts and complex estates, to comply with their registration obligations and to obtain their Self-Assessment (SA) Unique Taxpayer Reference (UTR).
The trustees of a charitable trust will not have to register until they incur a liability to pay any of the relevant UK taxes, but all charitable trusts are expected to maintain accurate and up-to-date written records of “beneficial owners” under reg 44(1). Full details, including FAQs on the implications for affected charities can be found here.
Recharging Apprenticeship Levy as part of a reimbursement for staff supplies
Following queries from a charity member CTG contacted HMRC to seek confirmation of Apprenticeship Levy’s place in the two concessions relating to staff recharges. These were the concession in VAT Notice 701/1, para 5.17 (secondment between non-profit bodies), and the payroll transfer concession for non-staff hire businesses.
The issue was whether payment, in either scenario, of a sum relating to the Apprenticeship Levy burden arising on the employer occasioned by that staff member, could be regarded as an employment cost and thus added to the charge (or the payroll cost as regards the second concession) without disabling the provisions in the concessions. The importance of this is that, should HMRC take issue with a recharge of Apprenticeship Levy, it could deem the concession to be wholly non-applicable, thus applying VAT to the entire cost of the staff in question.
Happily, HMRC has confirmed that they view Apprenticeship Levy as a cost of employment per se, and thus that the cost attaching to the staff in this respect can be added to the recharge, or payroll cost, without threatening the concession.
CTG would welcome feedback from members on their experience of the Apprenticeship Levy 6 months in. Please send any comments to info@charitytaxgroup.org.uk.
VAT case relating to ‘single supply’ and zero rated printed material
The Upper Tribunal decision in Metropolitan International Schools Limited (UKUT0431) deals, among other things, with the issue of determining the VAT treatment of a single indivisible supply where there appears to be more than one element. This decision is interesting in that it overturned the First-Tier Tribunal’s decision on this point, but not owing to a failure to deploy the correct legal tests, but rather a perceived failure to weigh up the factual position as fully (or accurately) as it ought. Charities that have relied on the First Tribunal’s decision in this case will need now to take advice. Charities should approach any case of relying on a relief for a complex supply with considerable care and take advice. You can read a more detailed commentary from CTG’s Technical Advisor, Graham Elliott, here.
Impact of Insurance Premium Tax
The Social Market Foundation has published a report highlighting the impact of Insurance Premium Tax (IPT) and its gradual increase since its inception in 1994 – when it stood at 2.5 per cent – to 12 per cent as of June 2017. the main focus of the report is on UK householders but charity members are encouraged to respond to CTG’s survey on the cost implications of IPT for charities.
Tax Updates in Cardiff (16 November) and Manchester (27 November)
CTG has organised tax update meetings for charities and advisers this November, in Cardiff and Manchester. Both sessions will review recent policy developments and providing practical tax updates and will include a presentation on recent Gift Aid developments, by Steve Carroll, from HMRC’s Charities Outreach team.
Other topics to be covered will include: Implications of Brexit for the sector, review of recent VAT case law, Making Tax Digital, Business rates developments and Autumn Budget 2017.
Both seminars will take place from 14:00 to 16:00, with a sandwich lunch available from 13:00. You can register for each event by following the link below:
Round-up of other topical developments
- Making Tax Digital: In response to a parliamentary question the Government has confirmed that: “for direct tax purposes charities will be exempt from the Making Tax Digital requirements, but that trading subsidiaries of charities will not be. In the interests of parity of treatment across all businesses, where a charity is liable to be registered for VAT and has taxable turnover above the VAT threshold, the Making Tax Digital requirements for VAT will apply”. This accords with the message given to CTG at our recent meeting with officials, but is the first time it has been confirmed by the Government in writing in the public domain. Further information on how we expect MTD to work can be found here, although things continue to develop and members should expect further updates over the coming weeks and months.
- Museums and tax: The Mendoza Review, an independent review of museums in England, has been published and includes statistics of the value of different tax reliefs and grants to the museums sector
- VAT refunds: the VAT 33A scheme allows included museums and galleries providing free admission to collection to reclaim VAT – worth £75m in 2016/17 (to the nearest £5m). In 2006/07 six museums were eligible, rising to 33 in 2016/17
- Acceptance in Lieu and Cultural Gifts Scheme (AiL and CGS): AiL enables cultural
objects to be offered as payment of Inheritance Tax, and CGS enables cultural
objects to be offered in return for a tax deduction; these objects are then
accessioned to suitable museum collections – worth £13m in 2016/17
- Business Rates Relief: no reliable specific information exists on museums’ business
rates, due to the factors that go into the rateable value of each venue and differing
levels of discretionary relief across local authorities, but a broad estimate has been
made of approximately £23m annually. The report highlights the potential benefits for museums following the York Museums Trust case. See Colin Hunter’s commentary on the case here for more information.
- Gift Aid: this data on museums charities, specifically, is not held
- Social investment: A new independent review has been launched which sets out how Government and the financial services industry can work together to build a culture of social impact investment in the UK.
- Local Charities Day: DCMS has published a toolkit to help organisations plan their support for Local Charities Day on 15 December 2017.
- Scrutiny of the Finance Bill: The Treasury Committee has published a letter from its chair, Nicky Morgan to the Financial Secretary to the Treasury, relating to scrutiny of the Finance Bill, including suggested improvements to HMRC’s VAT consultation tracker and Tax Information and Impact Notes (TIIN)
CTG Newsletter Archive
Members can catch up on CTG’s recent newsletters using the links below:
On this day in 2016, CTG’s newsletter included updates on Gift Aid donor benefits, CRS, a VAT case, GASDS and consultation on penalties for participating in VAT fraud!
CTG’s VAT case law tracker has also been recently updated.
Expert Commentaries
Read our expert commentary pieces and leave your comments and queries:
Please contact us at info@charitytaxgroup.org.uk if you would be interested in contributing a commentary piece.
Website, newsletters and supporting CTG
Charity and Observer Members are reminded that their membership is on an organisational basis and that there is no limit of the number of subscribers to the website per organisation. If you think a colleague would benefit from getting access to the website and newsletters directly, please encourage them to register online at www.charitytaxgroup.org.uk/join-us/ selecting your organisation from the drop-down box.
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.
|
