CTG Newsletter – 4 December 2017

Gift Aid donor benefits consultation – summary of responses published

The Government has published a summary of responses to the Gift Aid donor benefits consultation. As previously reported, the Government has announced that it will replace the current three tier thresholds with two thresholds. Under this reform donors will be no worse off in terms of the value of benefits that charities can offer them as the new limits will be, for every eligible donation, at least as generous as the current limit. This “sliced” two threshold solution was advocated by CTG in its consultation response and should help to avoid the problems of the cliff-edge effect that many charities currently face (and which can lead them to not claim Gift Aid at all).

The summary of responses confirmed that HMRC officials are setting up a working group to consider HMRC’s guidance and interpretation of legislation around donor benefits. CTG is co-ordinating feedback from charities on behalf of the working group and you can submit comments and suggested changes here.

Making Tax Digital updates

• Cost and impact: HMRC has published a revised statement of impacts for the Making Tax Digital for Business programme, including a breakdown of likely one-off costs and ongoing costs. Full details on the implications of MTD for charities and what it will mean in practice can be found here. CTG will continue to work with HMRC officials to ensure the system is practical for charities.
• Interest and late payment penalties: The Government is also seeking comments on the proposed way forward in relation to interest and late payment penalties. This consultation presents options for aligning rules and rates for interest across the main taxes, Income Tax Self-Assessment (ITSA), Corporation Tax (CT), and VAT. This includes aligning the high level rules for interest on VAT debt bringing them into line with ITSA and CT. The consultation also explores how late payment penalties could work and interact with interest. The government is proposing a new hybrid model that accounts for comments from previous consultations for late payment penalties and combines a ‘penalty charge element’ together with an ‘interest’ type calculation.
• Late submission sanctions: The Government has also published the summary of responses to the recent consultation on late submission sanctions for MTD and it is intended to take forward both elements as a coherent package. These consultations form part of the Government’s work to align and simplify the tax administration framework.

VAT grouping consultation – summary of responses published

The Government has published a summary of responses following its consultation on whether to make changes to UK VAT grouping following the decisions of the Court of Justice of the European Union (CJEU) in Larentia + Minerva and Marenave (C-108/14 and C-109/14) and Skandia America Corporation (C-7/13). Further details, including CTG’s response to the consultation, can be found here.

VAT Information Sheet 07/17: construction services and zero-rated relief

HMRC has published a new VAT Information Sheet on construction services and zero rated relief (relevant when a building is designed as a dwelling or intended for use solely for relevant residential (RRP) or a relevant charitable (RCP) purposes. This policy will affect the liability of the first grant of a major interest by the person who is constructing the building. In addition, it sets out the evidence needed to confirm that a development qualifies for zero-rated relief. The publication of this Information Sheet follows three Upper Tribunal judgments, Astral Construction Limited, Boxmoor Construction Limited, and J3 Building Solutions Limited. Full details can be found here.

Finance Bill 2017-18 published

Finance Bill 2017-18 was published on 1 December 2017, as well as Explanatory Notes. Provisions relating to SITR, RDEC, anti-avoidance, and VAT refunds to public authorities, may be of general interest to charities. MPs will next consider the Bill at Second Reading on Monday 11 December 2017 and the Bill is then scheduled to be considered in Committee of the Whole House on Monday 18 and Tuesday 19 December 2017.

Other topical developments

• VAT on charity single waived: The Chancellor has announced that VAT collected on sales for the X Factor winner’s charity song will be donated to the children’s charities Together for Short Lives and Shooting Star Chase. CTG welcomes this announcement, which highlight the costs that charities face from irrecoverable VAT. We hope that the Government will consider much broader reform of the VAT system in the coming years to ensure a level playing field for charities.
• Charity Commission speech: Helen Stephenson, CEO of the Charity Commission recently gave a speech at the Charity Law Association’s Annual Conference. she concluded by noting that the Commission would continue to regulate robustly, in order to tackle abuse and mismanagement; support charities with increased access to digital services, guidance and direction; and share good practice wherever possible.

CTG Newsletter Archive

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

• CTG Newsletter – 30 November 2017
• CTG Newsletter – 24 November 2017
• CTG Budget Update – 22 November 2017
• CTG Newsletter – 21 November 2017
• CTG Newsletter – 17 November 2017
• CTG Newsletter – 14 November 2017
• CTG Newsletter – 8 November 2017
• CTG Newsletter – 6 November 2017

CTG’s VAT case law tracker has also been recently updated.

Expert Commentaries

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

• VAT case relating to ‘single supply’ and zero rated printed material (Graham Elliott)
• Corporate Criminal Offence – implications for charities (Ian Short and Tania Dimitrovich-Archer)
• Definition of a ‘sport’ for VAT purposes – English Bridge Union case (Graham Elliott)
• Relevant Residential and Relevant Charitable buildings: Clawback provisions – Balhousie Holdings case (Graham Elliott)
• 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)
• 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.

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