HMRC consults on applying new definitions of 'charity' to tax relief

Finance | Vibeka Mair | 30 Nov 2011

HMRC has published a consultation on applying a single definition of “charity”, “charitable company” and “charitable trust” to all UK charity tax reliefs and exemptions.

Currently, the definition of “charity”, “charitable company and “charitable trust” only applies to gift aid. Through the proposed change, which will be made under schedule 6 in the Finance Act 2010, HMRC hopes to protect itself from non-compliance and fraud, as it considers the current definition of “charity” is more restrictive.

HMRC also says the new definition makes clear that UK charity tax reliefs and exemptions are available to organisations in EU member states (and Norway and Iceland), and their UK taxpayer donors, where the organisation would be recognised as a charity under law.

A Charity Tax Group spokesman said: “It was expected that this would happen and charities should not be unduly affected if they are already complying with the new 'fit and proper person' rules.

"In the vast majority of cases, affected charities will not need to do anything to meet the new requirements because they are already fully compliant with the law of their home country. Guidance on the effect of the new definitions on charities, particularly the 'fit and proper persons test', has already been published and can be found online."

Directory: Charity Tax Group

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