CTG Newsletter – 27 July 2017

Publishing a tax strategy

Your tax strategy will explain your business’s tax arrangements noting how you manage tax risks and your attitude to tax planning. While this will only apply to a limited number of members, we would welcome feedback on how you find this process and to see the final strategy once published.

Your first strategy should be published before the end of your first financial year commencing after Royal Assent of Finance (No. 2) Bill 2016 (which was on 15 September 2016). Your strategy counts as ‘published’ when it is first put on the internet. After the first strategy, you must publish one each year, within 15 months of the last one being published. Although you don’t have to notify HMRC when you’ve published, it would be helpful for HMRC to assess compliance if you let your CRM know when you have done so.

Parliamentary question on ways to increase charitable giving from higher-rate taxpayers

In response to a Lord’s question on what proposals the Government has to increase charitable giving from higher-rate tax payers, Lord Ashton of Hyde noted:

“The Government currently offers several schemes to incentivise higher-rate taxpayers to give. Tax relief is offered when donations are made through Gift Aid, when donating land, property, shares, or if gifts are left to charity in a will. Relief is also available for any individual or company who donates cultural artefacts through the Cultural Gift Scheme. At the Giving Roundtables held in 2016, the Government heard about opportunities to increase charitable giving by higher-rate taxpayers. Further announcements about those opportunities will follow.”

The full answer can be read here.

Round-up of topical issues

• An article by CTG Vice-Chairman Richard Bray has been published in the latest edition of the Charity Times magazine. In the article he highlights that recent political uncertainty has created a lack of clarity in the future of taxation and attempts to summarise a difficult and changing landscape. The article can be found here on page 22.

• A Gov.uk bulletin last week appeared to suggest that Chapter 3.21 of the HMRC Charities guidance had been updated to amend the benefit limits for donations. CTG sought clarification from HMRC officials who confirmed “that the benefit limits have not changed, however we removed reference to  benefit limit for donations made before 6 April 2011 (maximum of£500) made on or after  6 April 2011 in the table of chapter 3.21. In example 1 we changed the dates from 2012 to 2016, 2013 to 2017. We also replaced any instances of i.e. in the guidance with that is”.  
• HMRC has also updated its guidance Claiming a top-up payment on small charitable donations to show the increase in the Gift Aid Small Donations Scheme top-up payment to £2,000.

• Finance Bill 2017 will be enacted “as soon as possible after the summer recess”. The Government has now published explanatory notes on resolutions, which give a brief description of each of the Finance Bill resolutions.
  • The corporate interest restriction legislation will come into effect from 1 April 2017. While there is an exemption for loans from a charity to wholly owned subsidiaries, this exemption does not cover loans from third parties into subsidiaries, and/or any loans between subsidiaries, or upstream loans from subsidiaries to the charity. So you will need to consider this if your charity group has a net interest expense over the £2 million de minimis threshold (we are grateful to BUFDG and other charity members for flagging this)
  • The museum and gallery exhibitions: tax relief and tax credits resolution makes provision
    • (including with retrospective effect) for relief from corporation tax in
      connection with the production of museum and gallery exhibitions
    • for tax credits to be paid to museums and galleries exhibition production
      companies in respect of expenditure on the production of exhibitions.

• The Government has confirmed the following managerial changes at HMRC
  • Angela MacDonald, currently Operational Excellence Director in HMRC, will step up to lead the Customer Services Group, which oversees most of HMRC’s interaction with individual taxpayers, tax credits recipients, and small and mid-sized businesses online, by phone or face-to-face.
  • Penny Ciniewicz, currently Chief Executive of the Valuation Office Agency (VOA), will now return to HMRC to lead the Customer Compliance Group, which includes compliance for all customer groups, from large businesses to individuals, as well as HMRC’s counter-avoidance and fraud investigation functions.
  • Melissa Tatton, currently Director for Individuals and Small Business Compliance, HMRC, will step up to take over as Chief Executive for the VOA.

• The Department for Environment, Food and Rural Affairs (Defra) has published information about how the money raised from the plastic bag charge has been donated to good causes. Out of the 168 retailers who donated the proceeds to good causes.
  • approximately £33m went to local causes chosen by customers or staff
  • approximately £20m went to good causes relating to charity or voluntary sectors, environment and health
  • approximately £13m went to a combination of good causes (including research, education, arts, heritage and sports)

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

• CTG Newsletter – 20 July 2017
• CTG Newsletter – 14 July 2017
• CTG Newsletter – 11 July 2017
• CTG Newsletter – 5 July 2017
• CTG Newsletter – 29 June 2017
• CTG Newsletter – 22 June 2017

CTG Commentaries

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

• 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.

Consultations

Given that there are not many formal Government consultations open at present, CTG would like to use this opportunity to collect feedback from members on a range of topical issues.

The information you provide is crucial to informing our representations to Government so please share any information you can via the relevant consultation page on the CTG website or by e-mailing info@charitytaxgroup.org.uk.

• Assessment of recent Gift Aid changes (including Charities Online, new Gift Aid Declaration and new Retail Gift Aid methods)
• Insurance Premium Tax survey : what is the financial implication for your charity of the recent increase to 12%
• Discretionary Charity Business Rates Relief: have you experienced any changes in reliefs awarded by Local Authorities?
• Making Tax Digital: how many of your charity trading subsidiaries have a turnover that exceeds the VAT registration threshold [£85,000]?

While the deadline for responses to the Office for Tax Simplification’s (OTS) VAT review closed at the end of June, officials have indicated that they will accept responses into July. CTG’s response can be read here.

The Government is expected to respond to the Gift Aid donor benefits consultation and CIL Review in the autumn. No formal confirmation has been received yet as to whether the Government will publish the planned consultation on employer provided living accommodation.

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.