Current financial year ‘critical’ for shaping future of charity taxation

According to the Chair of the Charity Tax Group (CTG), John Hemming, the current financial year is likely to be the ‘most critical in decades’ when it comes to shaping charity tax policy.

The CTG’s annual review for 2018/19 proposes that, irrespective of Brexit, charities could be witness to a mass overhaul of the VAT system, as reliefs and rates come under increasing scrutiny from the Commission in Europe.

As a result, CTG will be undertaking a detailed research project to measure the value of existing charity VAT reliefs for charitable organisations, but also the socio-economic impact these reliefs can have as a result of being utilised by charities.

Hemming added: “Feedback and financial support from charities is essential to enable us to progress this important research, which will inform our representations to the Treasury.”

The review also made reference to the charity tax commission, set up by the National Council for Voluntary Organisations (NCVO) last year to evaluate the charity tax system as a whole.

It is expected to publish recommendations for potential reforms to the tax treatment of charities, later in the Summer.

CTG is a member of the commission’s advisory board and as part of its response to the consultation, based on member feedback, Hemming says it has called for the charity tax system to be ‘future-proofed’ and for long-term distortions to be addressed.

Recent changes to the Gift Aid Small Donations Scheme, Retail Gift Aid Scheme and the small trading exemption threshold show that the Government are willing to make administrative changes that will simplify the tax system and reduce costs for charities and donors.

However, at the CTG’s annual conference, held recently, Nicholas Montagu who chairs the commission declared that ‘major solutions’ are not on the agenda going forward. You can read more about this in our article here.

How can George Hay help?

We know that managing a charity or social enterprise in the current economic climate can be challenging. That is why we have a specialist team on hand to support the not-for-profit sector; providing audit, independent examination reports, accounting, taxation and advisory services to charities, academies, clubs and social enterprises of all sizes.

First and foremost, we can help you to operate in accordance with the current charity tax system, identifying risks and tax planning opportunities, but we can also help you to anticipate and prepare for future changes to the system.

To speak to one of our experts about how we can help, contact us today by calling 01480 426500.

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