CTG Newsletter – 3 January 2018
Happy New Year to all CTG members. We look forward to working with you in 2018!
Annual Return 2018 – information collected from charities will not include questions on Gift Aid and rates relief
Following the recent consultation on proposed changes to the charities Annual Return for 2018 (AR18), the Charity Commission has announced a number of amendments to the content of the annual return for 2018. Full details are available here.
Of particular relevance to CTG members, the Commission has also decided not to ask charities:
- whether they are claiming rate relief for the premises they use (although this decision may be reviewed at a later date)
- the amount of Gift Aid they have claimed (charities are already required to declare whether they are registered for Gift Aid, and the Commission will ask charities to provide their HMRC number).
The Commission says it requires these two pieces of information for regulatory purposes, but accepts that they may be available from other sources, and that it should pursue other options before adding to the reporting burden for charities.
These recommendations are in line with those outlined in CTG’s response to the consultation although we do still question why other new information is being required of charities and whether the associated compliance presents effective use of taxpayers and donors money. While recognising the importance of transparency, CTG queried whether the additional information requested could not be sourced from other data already publicly available, highlighting the potential additional administrative burden for charities.
Business rates in multi-occupied properties
Following the announcement in the 2017 Autumn Budget that the Government would legislate to reinstate the relevant elements of the Valuation Office Agency’s (VOA’s) practice prior to the decision of the Supreme Court in Woolway, DCLG has launched a consultation on business rates in multi-occupied properties – responses due by 23 February 2018.
Given that the Government is already committed to making the change, the scope of the consultation is limited to two issues:
- how the Government should capture this policy intention in legislation, and
- how this policy intention should then be implemented
Subject to Parliamentary approval of the Draft Bill, those businesses that have been directly impacted by the Supreme Court judgment will be able to ask the VOA to recalculate valuations based on previous practice. They will then be able to have their bills recalculated if they so choose – and backdated. This will include those businesses that lost small business rate relief.
The ruling was potentially important for small charities and charitable companies because many of them occupy two or three rooms or floors in multi-occupied buildings and not all of them receive 100 per cent business rate relief.
Registering a Charitable Authorised Investment Fund
The Charity Commission has published a blog post, highlighting the fact that it has now registered its first Charitable Authorised Investment Fund (CAIF). The new CAIF structure may be more advantageous than existing CIFs for charities – as the CAIF is an FCA authorised fund, it is considered a special investment fund and management fees will be exempt from VAT. For more information on CAIFs, you can read a commentary by Grania Bird, partner at Farrer & Co. To enquire about setting up a new CAIFs or converting a CIF into a CAIF, contact the Charity Commission’s Charitable Status Legal team.
Gift Aid reform proposals
CTG’s Vice-Chairman, Richard Bray’s recent commentary highlights that CTG is now well represented on the HMRC Charity Tax Forum working group looking at ways to ensure that the Gift Aid system is fit for the future. As part of this group, CTG members have agreed to write two papers considering:
- the impact of the General Data Protection Regulation (GDPR) on Gift Aid, particularly in relation to the future of enduring declarations
- what the future of Gift Aid looks like, considering issues such as how to maximise Gift Aid in the face of digital transformation.
We would welcome feedback from members on these topics (to info@charitytaxgroup.org.uk), so that we can ensure that the issues highlighted by both articles are representative of those being faced by the sector as a whole.
Round-up of topical developments
- GDPR: The ICO has produced a package of tools aimed at small and micro organisations, including charities including:
- Tax Strategy: Following discussions with officials we understand HMRC consider grants to be voluntary in the context of charities where the receiver does not provide services to the grantor. Further information can be found here.
- Disclosure of Tax Avoidance Schemes for VAT and other indirect taxes: ‘DASVOIT’ came into force on 1 January 2018 and VAT Notice 700/8: disclosure of VAT avoidance schemes has been updated. Further information about DASVOIT is available in Notice 799: disclosure of tax avoidance schemes for VAT and other indirect taxes. Section 6.2 Scheme 1 – the first grant of a major interest in a building aims to remove the VAT cost of extending, enlarging, repairing, refurbishing or servicing buildings that are zero-rated when sold by developers. Examples of the buildings concerned are houses, student halls of residence and buildings used by charities for non-business activities.
- Converting to a CIO: The Charity Commission has updated its guidance on changing a charity structure to reflect new powers to convert a charitable company to a CIO – in line with legislative changes from January 2018.
- Museums and galleries tax relief: The Arts Council England website now includes some useful information about the relief.
And turning back time…
- White sticks campaign: Just over 20 years ago, in the lead up to Christmas 1997, CTG working with the RNIB and others led a successful campaign to persuade the Prime Minister, Tony Blair, that VAT should not be imposed on white sticks and Braille products for blind people!
Get involved
CTG members are encouraged to:
- Save the date of the Tax Conference – 15 May 2018. We would welcome feedback from members on previous events and any suggestions for speakers or topics at next year’s Conference via the comment box here.
- Join the new Business Rates working group or tell us if you receive any correspondence from local councils reviewing any of your existing reliefs
- Join the Gift Aid practical issues working group in 2018 – read why here!
- Provide feedback on the draft legislation and VAT Notice that will introduce Making Tax Digital for VAT.
- Help us to improve the Gift Aid donor benefits guidance – submit feedback here
- Share their experience of a practical or technical charity tax issue by writing a commentary
- Share their feedback on how their charity has been affected by the Apprenticeship Levy so far (e.g. cost so far, amount of levy used or expected to be used)
- Share details of any challenges to VAT zero rating on advertising by agencies
- Share your experiences of registering with the Trusts Registration Service
Send any comments to info@charitytaxgroup.org.uk or call the Secretariat on 02072221265.
CTG Newsletter Archive
Members can catch up on CTG’s recent newsletters using the links below:
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.
CTG website and newsletters
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.
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