*Update*: The Commission has now published a call for evidence, seeking views from anyone with relevant knowledge, expertise or experience of the system of charitable tax reliefs in the UK. Response forms should be submitted via e-mail by 5pm on 6 July 2018. Click here for more information.

Sir Nicholas Montagu, a former chairman of Inland Revenue, is chairing a new NCVO led Charity Tax Commission which will develop recommendations to Government. The Terms of Reference have now been published and are reproduced below.

Responding to the launch of the Commission, Charity Tax Group (CTG) Chairman, John Hemming, commented:

“CTG welcomes this review of the tax status of charities, which offers a further opportunity to challenge the anomalous tax position charities often find themselves in, particularly in respect of VAT. It is essential that charity tax reliefs keep up with societal and technological developments, or they may become obsolete. We look forward to working with the Commission and recommend that future-proofing tax reliefs for charities be one of its major areas of focus.”

Purpose

The aim of the commission will be to develop a long term strategic policy approach to fiscal policy for the whole charity sector.

In order to achieve this, the commission will:

• examine the principles underpinning the tax treatment of charities
• analyse of the current tax treatment
• develop recommendations for reform.

The commission will principally focus on analysing the efficiency and effectiveness of the existing system of taxation and make practical recommendations based on a realignment and rebalancing of the current fiscal settlement.

Scope

The commission’s work will seek to answer four interrelated questions:

• What are the principles that should underpin the tax treatment of charities?
• Does the current tax treatment of charities reflect these principles?
• How does the current tax treatment of charities generate public benefit?
• How could the current tax treatment of charities be changed so as better to generate public benefit and reflect the principles identified?

Commissioners

The members of the commission are:

• Sarah Atkinson, director of policy, planning and communications, Charity Commission
• Pesh Framjee, head of not for profits, Crowe Clark Whitehill LLP, and special advisor at Charity Finance Group
• Lynne Oats, professor of taxation and accounting, University of Exeter Business School, and co-director of the Tax Administration Research Centre
• Dan Corry, chief executive, New Philanthropy Capital, and former chair of the council of economic advisers at the Treasury
• Clare Pelham, chief executive, Epilepsy Society
• Elizabeth Shawcross Wolfson, former deputy chief of staff for the ex-Chancellor of the Exchequer, George Osborn

The Treasury and HMRC will join the commission as observers. One further commissioner may be confirmed shortly. The commission’s first meeting will take place later this week at which point it will confirm its full terms of reference.

The findings and recommendations of the commission, which aims to complete its work within 18 months, will help inform the Inquiry into the Future of Civil Society chaired by Julia Unwin CBE, which is due to conclude in 2019.