Commercial Secretary to the Treasury, and its spokesperson in the House of Lords, Lord O’Neill Of Gatley has answered a question from Lord Hodgson of Astley Abbotts, highlighting the assessment made of the cost of implementing the CRS for charities compared to its intended benefit:

“A full impact assessment for the Common Reporting Standard (CRS) was published at Budget 2015 in a Tax Information and Impact Note (TIIN).

HMRC has estimated that between 500 and 8,000 of the more than 165,000 charities in the UK could be affected by the CRS. Precise estimates of the overall cost are difficult to make given the upfront costs to charities is still uncertain.

There has been no assessment of the impact on grant recipients.

Including charities is vital to create true transparency in the international tax system, which ultimately benefits taxpayers through reduced tax evasion and avoidance.

In the UK the charity sector is well regulated, but this is not the case elsewhere around the world. If another jurisdiction excluded charities this would allow a simple method for evaders to escape reporting –significantly impacting the UK’s inbound data and hence the predicted yield from the CRS.

As signatories to this global standard, the UK has agreed to the definitions that will include charities where they have predominantly investment income. To make the CRS an effective tool in tackling evasion, and show the benefits to the UK taxpayer, the UK must adhere to the global standard – including on charities – in order that we can expect our international partners to do likewise.

Automatic exchange agreements are expected to raise over £0.5 billion over the five-year scorecard period. This amount has been updated from the original TIIN after a review by the Office for Budget Responsibility.”