Tax and charity chiefs strengthen links

Tax and charity chiefs are working together to develop a “joint portal” so that applicants can apply simultaneously for charity registration and recognition as a charity for tax purposes.

The initiative was revealed in HM Treasury minutes, published in September, which covered the Charity Commission’s response to recommendations by the Public Accounts Committee in relation to the Cup Trust case.

After it was registered by the commission as a charity in 2009, the British Virgin Isles-based Trust claimed £46 million of Gift Aid while donating only £55,000 – the equivalent of 3p in every £100 received in donations – for charitable purposes.

The Charity Commission accepted all the committee’s recommendations although it said it had reviewed its conclusion that the Cup Trust met the legal definition of a charity and had reached the same conclusion as it had originally.

The committee’s recommendations included that it review procedures to ensure it carries out “proper and appropriate checks” before registering a new charity and that it should liaise with HM Revenue & Customs (HMRC) before registering any charity where there are what it called “red flags” that raise concerns about trustees or where charities are based in tax havens.

The minutes reported: “The commission…is developing a joint portal to apply simultaneously as a charity with the Charity Commission and recognition as a ‘charity for tax purposes’ by HMRC.

“A new risk framework and assessment process identifies as high risk any complex structures, including links to other companies, so appropriate additional questioning would occur. Where charitable status is satisfied, but concerns remain, charities are monitored.”

As advisors experienced in working with charities, Nicklin’s can provide comprehensive advice on all aspects of tax, to ensure maximum tax efficiency and compliance. For more information, please contact us.

Posted in Charity News.