CTG Newsletter – 25 October 2017

HMRC Trusts Registration Service

The Trusts Registration Service (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 Unique Taxpayer Reference.

It replaces the current paper 41G (Trust) form and the ad hoc process for trustees to notify HMRC of changes in their circumstances. Trusts that are required to register with HMRC are now required to do so through the TRS. The TRS will provide a single online route for trustees, and personal representatives of complex estates, to comply with their registration obligations.

The trustees of a charitable trust will not have to register until they incur a liability to pay any of the relevant UK taxes (the list of relevant UK taxes is: income tax, capital gains tax, inheritance tax, stamp duty land tax, stamp duty reserve tax, land and buildings transaction tax (Scotland)). If after claiming a tax relief the trustees have not incurred a liability, in a given tax year, to any of the relevant UK taxes then HMRC would not expect them to register on the TRS. The trust will need to complete registration by 31 January after the end of the tax year in which the trustees have incurred a liability to 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). 

CTG is seeking clarification from HMRC officials as to how “beneficial owners” is defined and what the practical implications for charity trustees will be.

CTG is also pushing for the guidance and FAQs to be hosted on the gov.uk website. At present, additional details and a link to the FAQs can be accessed on the CTG website here.

Financial Reporting Council draft amendments to FRS 102

Members are reminded that, in September 2017, the Financial Reporting Council (FRC) published FRED 68, a set of draft amendments to FRS 102 regarding payments by subsidiaries to their charitable parents that qualify for gift aid. The amendments intend to clarify when profits from a non-charitable subsidiary can be distributed to the parent charity. CTG has submitted a short response to the consultation on these proposals, which closed on 20 October 2017.

CTG events

Tax Updates 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, 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:

• 16 November 2017, in Cardiff, in association with Deloitte
• 27 November 2017, in Manchester, in association with EY

Observer Member meeting

CTG’s Observer Members can register for the next meeting on 31 October 2017 here.

Round-up of topical developments

• Living Legacies event: There are still a number of places available at Philanthropy Impact’s Living Legacies event on 1 November 2017. Further details about Living Legacies and registration details can be found here.
• Museum and Galleries Tax Relief: The Public Bill Committee is currently scrutinising the Finance Bill (No.2) 2017 and amendment 29 (tabled by Labour MP Peter Dowd) called on the Government to publish a review of the effectiveness of the Museum and Galleries Tax Relief (clause 21) after its implementation, so that  its impact on the sector, and particularly smaller and independent companies could be ascertained. Following debate the amendment was withdrawn after the Government suggested that a formal statutory review was not required, but that regular informal monitoring and liaison with stakeholders would continue to take place.
• Penalties for enablers of tax avoidance schemes: HMRC has published draft guidance on new legislation for enablers of defeated tax avoidance schemes (to be introduced in Schedule 16 Finance (No. 2) [Act] 2017). If you have any comments on this draft guidance, you can send them to ca.consultation@hmrc.gsi.gov.uk by 30 November 2017.
• Compliance with financial sanctions: New guidance has been published by the Office of Financial Sanctions Implementation (OFSI) to help ensure compliance with financial sanctions which are designed to support UK foreign policy and national security. The move was prompted by requests, notably from smaller charities, asking for clearer information on issues affecting the sector so they could ensure they complied.
• Protecting against charity fraud: The Charity Commission has updated its guidance on protecting against charity fraud.
• HMRC Second Permanent Secretary: HMRC has announced that it will appoint a Second Permanent Secretary to lead its work on tax, fiscal events, including Brexit, and to be the Tax Assurance Commissioner. They will also lead on Brexit, which will continue to grow in importance over the next few years.

CTG Newsletter Archive

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

• CTG Newsletter – 17 October 2017
• CTG Newsletter – 10 October 2017
• CTG Newsletter – 4 October 2017
• CTG Newsletter – 27 September 2017
• CTG Newsletter – 22 September 2017

CTG Commentaries

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

• Proposed new penalties for participation in VAT fraud (Edd Thompson and Juliet Bailey)
• Summary of recent VAT cases on partial exemption, sports supplies & charitable annexes (Graham Elliott)
• Benefits of joining the CTG Gift Aid practical issues working group (Keren Caird and Donna Perry)
• Iberdrola VAT case – Implications for Sveda? (Dermot Rafferty)
• Is a CASC a Charity (for Tax Purposes)? (Graham Elliott)
• Charity VAT Recovery – The Road Not Taken (Graham Elliott)
• 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

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.