CTG Newsletter – 27 September 2017

Autumn Budget 2017 – CTG submission

The Chancellor has confirmed that the date of the Autumn Budget 2017 will be Wednesday 22 November 2017. CTG has published its pre-Budget submission which identifies four key areas in which Government can support the charity sector.

1. Engagement with charities to ensure the VAT system is fit for the future
   • By working with the sector to identify the implications of the modernisation of charity
     operations and innovations that may not have been envisaged by the original scope of reduced rates and exemptions, such as those relating to supplies of advertising.
   • By actively listening to the charity sector during Brexit negotiations, particularly in relation to the future operation of the VAT system.
   • By liaising closely with key sector representative bodies when there is an emerging charity VAT issue, to ensure clear and official guidance and advice is promulgated, avoiding uncertainty and confusion.
   • By allocating sufficient resources to ensure key VAT guidance notes are reviewed and updated promptly
2. Extending the Making Tax Digital charity exemption to wholly-owned charity trading subsidiaries that are members of a charity’s VAT group
3. Progressing discussions relating to the reform of the Gift Aid donor benefit rules
   • By establishment clear timelines and objectives for all its Gift Aid working groups to ensure that they are effective, for instance by increasing eligible Gift Aid and ensuring compatibility with new technology and other innovations.
   • By accepting the additions to the guidance proposed by CTG in respect of Gift Aid and
     fundraising materials.
   • By publishing its response to the Gift Aid donor benefits review, to provide clarity on the
     relevant thresholds, definition of the “in consequence” rule and the process for appropriately
     valuing benefits.
   • By ensuring that no unilateral changes are made to policy following reviews by campaigning
     bodies, which are often slanted and ignore the whole picture. In particular, we encourage the
     government not to tamper with upper rate tax relief without the fullest consultation with CTG and bodies with experience of philanthropic situations.
4. Addressing the cumulative financial and administration burden of charity taxation
   • By establishing the proposed HMRC Charity Tax Forum working group on the cumulative financial burden of charity taxation and requiring it to report quickly on the issue and ensuring that the direct and indirect costs for charities are taken into account when compiling Impact Assessments.
   • By providing, where possible, free tax-reporting tools for charities.
   • By committing to protect 80% mandatory business rates relief in England.
   • By committing to protecting the Employer Provided Living Accommodation exemption, which is so beneficial to many charities, such as churches, hospitals, higher education establishments and heritage buildings where accommodation is provided for the better performance of the duties of those employees who are provided with accommodation.
   • By committing to a review of the current Insurance Premium Tax (IPT) burden faced by charities to assess whether a total or targeted exemption or a reduced rate would be achievable where the insurance is required to cover activities or premises that directly relate to a charity’s objects.
   • By making clear in its response to the Community Infrastructure Levy (CIL) Review that a charity exemption will continue to be included if any successor tariff is introduced.
   • By considering the extension of eligibility for the Apprenticeship Levy to volunteer expenses, as well as to staff salaries and expenses.
   • By considering ways in which tax relief and other financial support can help to drive valuable Research and Development (R&D) work by research charities.
   • By reviewing the effectiveness and necessity of anti-avoidance legislation affecting charities (particularly Common Reporting Standard requirements) and considering whether measures should be more targeted and, where appropriate, exclude charities.

HMRC GASDS guidance for “Community Buildings” updated

HMRC has issued updated guidance on the Gift Aid Small Donations Scheme (GASDS) with the section ‘Community buildings’ revised to clarify how much a charity can claim under GASDS, from 6 April 2017. Full details are available here.

Living Legacies event – 1 November 2017

Philanthropy Impact is holding a conference Living Legacies (known as Charitable Remainder Trusts in the US) on the morning of 1 November 2017, in London. The event is designed to create a greater understanding of Living Legacies and their benefits to charities and donors, whilst also reviewing the tax implications and how it would operate in the UK, if introduced. The expert panel will draw from experiences from the US, to outline how this could add to the “basket of giving incentives and potentially generate important new income for the sector.

CTG has been working with Philanthropy Impact to review the practicality and efficacy of the proposed Living Legacies mechanism and to determine how they would be regulated. A key advantage of Living Legacies would be the financial security they would provide to donors in their lifetime. The mechanism would allow a donor to give a substantial tax-effective gift in their lifetime, cultivating a relationship with the charity while providing a regular, but modest income from this gift for the remainder of the donors life.

You can register for this event here. There is a small fee for organisations that are not members of Philanthropy Impact.If you are unable to attend the event, but would like more information, please contact us at info@charitytaxgroup.org.uk.

Round-up of topical developments

• Gift Aid and SMS – meeting with AIME: CTG’s Gift Aid practical issues working group will be holding a meeting on 3 October 2017, at which Rory Maguire, Managing Director at the Association for Interactive Media & Entertainment (AIME), will be taking the opportunity to discuss the agreement that AIME has reached with HMRC in respect of Gift Aid audit trails for gifts via SMS. There are still a few spaces available for charities to sign up – contact us at info@charitytaxgroup.org.uk if you would be interested in attending.
• Simple Assessment: In a new policy paper HMRC has confirmed that, from September 2017, it will remove the need for some customers to complete a Self Assessment tax return, starting with two groups: new state pensioners with income more than the personal tax allowance in the tax year 2016 to 2017; and PAYE customers, who have underpaid tax and who cannot have that tax collected through their tax code. All existing state pensioners who complete a tax return because their state pension is more than their personal allowance will be removed from Self Assessment in the tax year 2018 to 2019. Customers with more complex tax affairs who continue doing Self Assessment will still benefit from a modernised process in the future. This means they will only be asked for information needed to assess their tax, benefits and credits. HMRC will complete the rest of the information automatically.
• Off-payroll working: HMRC guidance on off-payroll working through an intermediary (IR35) has been updated to add an explanation that off-payroll rules may apply if an agency, umbrella company or similar third party supplies a worker by engaging the worker’s intermediary.
• Using old £1 coins: It has been announced that BBC Children in Need will be partnering with The Royal Mint and HM Treasury on their £1 coin campaign, joining forces for Pudsey’s Round Pound Countdown.
• Apprenticeship Levy: The Education and Skills Funding Agency has confirmed that the register of apprenticeship training providers (RoATP) is now open for applications and closes at 5pm on 27 October 2017.

CTG Newsletter Archive

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

• CTG Newsletter – 22 September 2017
• CTG Newsletter – 15 September 2017
• CTG Newsletter – 12 September 2017
• CTG Newsletter – 6 September 2017
• CTG Newsletter – 29 August 2017
• CTG Newsletter – 22 August 2017

CTG Commentaries

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

• 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

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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.