The Charity Tax Commission ('CTC') has published its report ‘Reforming charity taxation – towards a stronger civil society’. There are several recommendations, some short-term proposals and some longer-term proposals. Short-term proposals include reforming gift aid, launching a universal gift aid declaration database, making offering ‘payroll giving’ schemes mandatory, simplifying VAT and removing VAT from wills that include a charitable donation, launching a consultation on extending business rates relief to wholly-owned trading subsidiaries and building public trust by improving openness. Longer-term proposals include comprehensively reviewing VAT for charities, reconsidering business rates relief, further research into gift aid.
The Charity Tax Group ('CTG') has responded to the publication and notes that the Commission adopted a fiscally neutral approach so that there would be no excuse for not implementing the recommended reforms. CTG accepts that this is a sensible short-term approach given the current financial uncertainties due to Brexit and hopefully can result in some important and targeted quick fixes, however, the CTG comments “overall, the impact of this report has been limited by restricting its recommendations to fiscally neutral changes to the tax system, as there may have been greater engagement and creative thinking from the sector if broader parameters had been set. Simply moving money from one pocket to another in the same pair of trousers when you have outgrown the trousers is a problem still to be resolved.”.
Stone King assisted Philanthropy Impact in its submission to the CTC and our consultant Jonathan Burchfield attended a meeting which Philanthropy Impact had with the Chair of the CTC in order to discuss its submission. Jonathan's comments:
“There is much to welcome in the Commission’s proposals – for instance, the suggestion that Business Rates Relief be extended to charity trading companies was suggested by Stone King and should be very beneficial. There are also some really helpful statistics giving insights into areas such as gift aid recovery and into the purpose of giving charitable tax reliefs. However, I entirely agree with the CTG’s disappointment with the limitations set on the review to fiscally neutral proposals which has clearly constrained the Commission and meant, for instance, that many of Philanthropy Impact’s really imaginative proposals to increase charitable giving were immediately discounted. Also, one point of detail - I must admit that personally I consider that the suggestion to remove VAT on solicitors’ charges for drafting Wills which include a charitable legacy is misconceived – the Commission suggests this on the basis that doing so would “give solicitors a greater incentive to raise the question of whether someone wants to leave a gift to a charity in their will”. At Stone King, not least since we support Remember A Charity, we already commit to discussing this issue with all of our clients when discussing their Wills. Also, such a proposal would create a minefield of administrative difficulty for solicitors!”