Charities tax compliance

The Association of Taxation Technicians (ATT) and the Chartered Institute of Taxation (CIOT) respond to the HMRC consultation on Charities tax compliance (the Consultation).

The purpose of the Consultation was to explore reasonable and proportionate changes on how to reform some tax relief rules that are deemed not work as intended. It is envisaged that these changes would help tackle non-compliance and protect the integrity of the charity sector.

Areas under consideration included:

• Preventing donors from obtaining a financial benefit from their donation under the tainted charity donations rules.
• Preventing abuse of approved charitable investments.
• Closing the gap in non-charitable expenditure rules.
• Sanctioning charities that do not meet their filing and payment obligations.

We made the general point that the charity sector provides a huge contribution to UK society, supporting millions of people in a variety of ways, often filling gaps left by government or commercial enterprises in the provision of services or satisfaction of needs.

We also noted that many charities, particularly smaller ones, are run or substantially resourced by volunteers, and that these factors provide important context when considering the needs of charities, and any sanctions they should face for non-compliance.

You can find out more about our specific responses to each of the four areas referred to above in our full response.