The government is reportedly considering various compromises over the proposed tax relief cap, as opposition from the voluntary sector to the plan continues to mount.
Options apparently being considered by the Treasury include making the tax relief cap apply only to donations made to foreign charities, and somehow exempting charities that are funded mainly by one or two major donors.
Whitehall sources told the Daily Telegraph yesterday that work was under way to ensure the proposals are targeted at wealthy people who are using foreign charities to avoid paying tax.
One source reportedly said: “We want to end the abuse involving foreign charities, but that is different to big established British charities raising large sums of money – that is not something we want to hinder.”
Meanwhile, aides to the Chancellor told the Financial Times that Osborne is not prepared to exempt the whole sector from the cap, but is seeking ways to make sure that organisations that are funded by just one or two wealthy donors, do not lose out.
Cameron: No doubt there is abuse
The Prime Minister addressed the issue again yesterday during his visit to Indonesia, with comments that lend weight to the possibility of different tax treatments for charities registered here and abroad.
He told reporters: “There is no doubt that abuse is taking place.
“Some people have been using charities established in other countries to funnel money in, to get their tax rate so they’re not paying 50p tax or 45p tax but in some cases 10p or 20p tax. I think that isn’t right.”
He also promised to listen “very sympathetically” to charities worried about the plans, and later told ITV News that he would meet with charity leaders to discuss the proposals before they are published as draft legislation in the autumn.
Etherington: Bogus charities suggestion ‘disgraceful’
But the sector has hit back at the notion that donors are deliberately using bogus charities to avoid paying tax. Sir Stephen Bubb has written to Charity Commission chair Dame Suzi Leather demanidng that the regulator open an investigation into the PM's claims.
And in a short video posted on the GiveitbackGeorge campaign website, NCVO chief executive Sir Stuart Etherington (pictured) said: “Number 10 has suggested that some people are giving donations to charities that aren’t doing charitable work, or that they are making donations to minimise their tax bill.
“Both of these suggestions are pretty disgraceful. In order to make these allegations they have to have proof. They have to be able to show that these charities are not doing charitable work and then it will be a matter for the regulator to investigate, not a matter for the Prime Minister to pontificate about.”
Sir Stuart went on to say that the proposed cap will affect the whole sector, not just charities reliant on major donors, because “philanthropists also give to foundations and foundations make grants to charities”.
