The government has said it will shortly issue a clarification note on the tax relief cap announced in the Budget and has also promised a full consultation on the policy.
David Gauke MP, Exchequer Secretary at the Treasury, met with various sector leaders yesterday to discuss the proposed policy. Among those attending were Sir Stuart Etherington, NCVO chief executive; Dominic Casserley, Charities Aid Foundation chair; and Matthew Bowcock, chief executive of the Community Foundation Network.
Representatives from the Cabinet Office and the Treasury were also present.
Hannah Terrey, head of policy at CAF, who was there too, said it was a “useful and constructive meeting” at which the sector representatives explained to the minister how the proposal might affect different sector groups.
She said the Treasury indicated that it would shortly publish a clarification note providing detail of how the cap would be implemented on different types of giving – “such as whether it would relate to the whole of the relief or just the marginal rate”. However, the minister gave no indication of what this detail would contain.
Terrey added that the sector representatives gave a clear message to the minister that the policy had the potential to undermine the good work the government had done previously around charitable giving, and relayed how angry the sector felt at the connection that had been made between charitable giving and tax avoidance.
The other sector figures at the meeting were Peter Agar, development director at the University of Cambridge; Kate Hunter, executive director at CASE Europe, and Chloe Stables, NCVO’s parliamentary manager.
HMRC: ‘Cap has nothing to do with Persche’
Meanwhile, HMRC has flatly denied that the new tax relief cap announced in the Budget is motivated in any way by the European Court of Justice decision on Persche.
Asked about the alleged connection between the new policy and the Persche case, as claimed by charity tax experts and reported on civilsociety.co.uk yesterday, an HMRC spokesman responded: “The Budget announcement has nothing to do with the ECJ Persche judgment.”
Stephen Lloyd, partner at Bates Wells and Braithwaite, said: “I am absolutely delighted but somewhat surprised that HMRC say that the budget decision as regards higher-rate tax relief, had nothing to do with Persche or fraud.
“A very senior government/Treasury source indicated this to be the case and that the reason for the Budget decision was the flagrant defrauding of the charity exemption via other EU jurisdictions such as Malta and Italy.
“It is great that this has been clarified by HMRC - and that it is on the record. However, if it is not for this reason, the sector urgently needs clarification as to why charities are being penalised.”
Nobody from HMRC attended yesterday’s meeting.
