CFDG has asked HMRC to extend the small charities exemption from iXBRL to trading subsidiaries of these groups.

The umbrella body’s chief executive Caron Bradshaw wrote to the Permanent Secretary for Tax, Dave Hartnett, yesterday to highlight “a discrepancy” in HMRC’s recent guidance on iXBRL.

She explained that despite HMRC’s concession that charities with income of less than £6.5m can still submit their accounts in PDF format, instead of having to use iXBRL, its guidance effectively undermines this relief by stating that the exemption doesn’t apply to trading subsidiaries of charities.

Bradshaw wrote: “Consequently, small charities with trading subsidiaries will have to either purchase iXBRL software or outsource iXBRL generation for the subsidiary. This seriously undermines the relief for small charities that this exemption was originally intended to provide.”

She proposed that HMRC should extend the exemption to trading subsidiaries within small charity groups where the combined income is less than £6.5m. “This would avoid high costs to many small charities that have trading subsidiaries."

The issue and proposed solution were initially identified by specialist charity consultancy and auditing firm, Sayer Vincent.  

Read the full letter here.