CTG Regional Meeting Mills & Reeve, Cambridge 26 October 2016 The voice of charities on Tax

Charity Tax Group  Established in 1982 to make representations to Government on charity taxation  Over 500 members of all sizes representing all types of charitable activity  Leading voice for the sector on this issue  The voice of charities on Tax

Charity Tax issues Graham Elliott – Tax Advisor 26 October 2016 The voice of charities on Tax

Implications of Brexit  Position until we leave  Likely outcomes that impact on charities  Impact of Great Repeal Act  Existing referrals to CJEU  Future of Case Law The voice of charities on Tax

Brexit as Opportunity  Possible extension of existing charity reliefs (e.g. buildings, disabled, marketing spend)  Possible omnibus reduced rate for charity purchases  Seeking broader charity de-regulation for direct tax in drive for simplification The voice of charities on Tax

Brexit Threats  At-risk exemptions  Harsher input tax environment (cost component?)  Need for higher tax revenues may see abolition of higher rate gift aid relief  Possible reduction of general gift aid’s application to certain charities that serve well off The voice of charities on Tax

Longridge on the Thames  ‘Yarburgh’ history  ‘Fisher Tests’  Finland CJEU decision  Court of Appeal decision  End of ‘Predominant Concern’ The voice of charities on Tax

Gemeente Borsele  Possible basis for low value charges being non-business  Mixed with element of means testing  Only related to public bodies?  How small do you have to be? The voice of charities on Tax

Village Hall VAT relief  Caithness Rugby Football Club  New Deer Community Association The voice of charities on Tax

VAT and Mailing Packs  What has been the outcome in practical terms? The voice of charities on Tax

Other VAT issues  Update on agency staff  Printed material provided to donors (FotE case)  Latest changes to S33A  Issues relating to Hospices The voice of charities on Tax

Gift Aid Donor Benefits Consultation  Benefit costs deduction model  Split payment model  Change to existing benefit limits (e.g. one or two thresholds)  Extension of ‘disregards’, perhaps with a specific value such as £3 The voice of charities on Tax

Donor Benefits – What hasn’t been addressed?  Issue of ‘in consequence’ and its interpretation  Split payments requirement for specific benefits to be offered  The VAT piece  Rational model of valuation The voice of charities on Tax

Gift Aid Small Donations Scheme  Small Donations Bill has made its way through the HoC  Bill relaxes eligibility, gets rid of Gift Aid history requirements to increase take-up  Matching rule maintained  Contactless donations to be included in scope  Community buildings rules changed to include donations within a Local Authority The voice of charities on Tax

Gift Aid practical issues Working Group  Meets quarterly under Chatham House rules  Representatives responsible for Gift Aid in some 20 charities  Open discussion on all Gift Aid-related issues  Sharing of best practice The voice of charities on Tax

Apprenticeship Levy  Set to enter into force from April 2017, Levy charged at 0.5% of paybill  £15,000 annual allowance means paybills over £3m caught  Connected charities able to allocate their allowance amongst them before relevant tax year  Levy payments enter a digital account, receive 10% Government top- up, can be spent on training  18 months to spend funds, after which they are re-allocated (though still to be used on apprenticeships) The voice of charities on Tax

Apprenticeship Levy – concerns  Lack of time to prepare – CTG calling for delay  Lack of structure to provide apprenticeships in charity sector – CTG calling for inclusion of volunteer training/expenses  Unspent funds to be re-allocated away from “charitable purpose” – CTG calling for ability to direct funds towards specific alternative charity The voice of charities on Tax

Apprenticeship Levy – next steps  Government clear that digital providers will be ready  Further guidance expected before end of 2016  CTG keen to continue receiving feedback on cost of Levy on charities – if possible including clear figures The voice of charities on Tax

Common Reporting Standard  CRS now implemented into UK law – unlike FATCA, no blanket charity exemption  “Financial Institutions” will have reporting requirements  Charity is an FI if managed by an FI, and having 50% of gross income from investing or trading in financial assets  First reporting deadline: April 2017 – reporting requirements begin from April 2016 The voice of charities on Tax

Other issues  Making Tax Digital agenda  Gift Aid Intermediaries  Business rates review – Scotland and NI  Museum tax relief The voice of charities on Tax