CTG Newsletter – 17 October 2017
Commentary on proposed new penalties for participation in VAT fraud
In the second Finance Bill 2017, which is currently working its way through parliament, the Government has put forward proposals to introduce new penalties for “participation” in VAT fraud. This follows a consultation on the subject late last year. Whilst the measures are by no means specifically targeted at the not for profit sector, it is important that charities and, in particular, their trustees are aware of the potential implications arising from these changes to the law.
At heart, and insofar as charities and their trading subsidiaries may be concerned, there are three crucial elements to the proposed new legislation:
- A new fixed 30% penalty which could be imposed on organisations that know or “should have known” that they have been involved in VAT fraud;
- The prospect of personal liability for all or part of that penalty for trustees or company officers;
- Reputational risk for both the organisation, its trustees and its company officers, with the potential to be “named and shamed” by HMRC.
Read the full commentary by Edd Thompson and Juliet Bailey (VAT specialists at Mazars) here.
CTG meetings in Cardiff and Manchester
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
- A review of recent VAT case law
- Making Tax Digital
- Business rates
- Autumn Budget 2017 outcomes (Manchester meeting)
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:
There is no charge to attend for charities and CTG Observer Members, so please feel free to share details of these events with interested colleagues and associates.
Apprenticeship Levy
Members required to pay the Apprenticeship Levy may be interested in the following updates:
- The Education and Skills Funding Agency has received a number of queries from employers on the various clauses of the employer agreement and has published responses to commonly asked questions. The employer agreement sets out the terms for use of the apprenticeship service by the employer and the obligations by which the employer agrees to be bound. It is a set of standard terms and conditions which have been designed to work for all different types of employers and it is not possible to amend the agreements for particular employers. Signing of the agreement is a condition of access to the service. If there is a legal basis on why an employer is not able to sign this agreement, the ESFA would welcome further information.
- Last week the government published its regular quarterly Apprenticeship data. After a long period of consistency the the latest set of data has revealed an unprecedented 61% drop in the number of apprenticeships starts between May and July 2017, when compared to the same period last year. This drop has coincided with the introduction of the Apprenticeship Levy although it remains to be seen whether this is just a blip or indicative of a wider trend.
- The CEO of CTG member CLIC Sargent has posted an interesting piece on LinkedIn: Why is the apprenticeship levy bad for charities? highlighting frustrations at the restriction of levy payments to training only (and not for example salaries) the disproportionate impact on services-led charities with large workforces, and the difficulty in using the whole levy contribution. CTG would welcome feedback from other charity members on their experiences of the Apprenticeship Levy to date at info@charitytaxgroup.org.uk.
- The Education and Skills Funding Agency has issued a reminder that the register of apprenticeship training providers will close for applications at 5pm on Friday, 3 November.
Round-up of topical developments
- Gift Aid donor benefits: CTG representatives will be attending the first meeting of HMRC’s Gift Aid donor benefits working group next week. The group will meet on a quarterly basis and there are plans to discuss issues including: the valuation of certain benefits for application of the relevant value test; the correct interpretation of the ‘in consequence’ rule; and the correct application of the split payment rule and averaging rule. If you have any comments on the current donor benefits rules and guidance please let us know at info@charitytaxgroup.org.uk.
- Social Investment Tax Relief: Exchequer Secretary to the Treasury, Mel Stride MP, has responded to a series of parliamentary questions on the administration of the Social Investment Tax Relief (SITR).
- Business rates: Marcus Jones MP, Parliamentary Under-Secretary of State for Local Government at DCLG has responded to a parliamentary question requesting detail on the measures the Government plans to introduce to ensure that small charities are not treated less favourably than other small businesses in relation to their liability for non-domestic rates.
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