The HMRC Charity Tax Forum met yesterday and a number of CTG representatives were in attendance. Points of interest included:

• Charity tax returns: HMRC officials have confirmed that as part of a compliance review 3,000 charities (those with the largest Gift Aid claims) will be asked to complete a tax return this year. This will affect many CTG members, so please keep an eye out for a letter from HMRC in the next few weeks, advising that you need to complete a tax return. We will share a sample letter and further guidance in due course as we appreciate that not all members will have completed the CT600E in recent times (see here for more information on the tax return). We also understand that requests for tax returns will be sent to a random sample of several hundred CASCs.
• Making Tax Digital (MTD) deferral letters: HMRC officials confirmed that all organisations receiving a deferred MTD start date (of October 2019 rather than April 2019) should now have received a letter to this effect. If you think your organisation should be deferred but have not received a letter, you are are encouraged to contact the Charities VAT helpline. Charities are also encouraged to read the various resources on the Making Tax Digital for VAT (Charities) webpage on the CTG website.
• Full first names on Gift Aid declarations: HMRC officials confirmed to the Forum that following discussions with CTG there will be no mandatory implementation or hard start date, but charities will be strongly encouraged to provide HMRC with full forenames wherever that is practical and possible to do so. There will be no retrospective action taken i.e. current Gift Aid Declarations will remain valid. Officials referred Forum members to the note of CTG/HMRC meeting here.
• Corporate Criminal Offence guidance: Representative bodies for CASCs and church treasurers discussed proposed draft guidance tailored for their sectors. It was agreed that discussions should be undertaken with the Charity Commission to increase awareness about the responsibilities charities have under this legislation – read this CTG commentary by KPMG for more information.
• IR35 (off-payroll worker rules): The extension of off-payroll working in the private sector from April 2020 was announced in the 2018 Autumn budget. Responsibility for operating the off-payroll working rules will therefore move from individuals to the organisation, agency or other third party engaging the worker. HMRC officials stated that support and guidance will be provided to organisations ahead of implementation. Existing rules will continue to apply for public sector organisations (which does include some charities). Small companies will be exempt which will mean a large number of charities will be excluded. The Companies Act definition will be used – to be small a company must meet two of the following conditions
  • annual turnover must be not more than £10.2 million (CTG has initiated discussions with HMRC about the definition of turnover and whether it should include donation and grant income or not)
  • the balance sheet total must be not more than £5.1 million
  • the average number of employees must be not more than 50
• Charity Tax Commission: The Commission has now finished taking evidence and is considering its recommendations. It will be consulting with its expert advisory group (which includes CTG Chairman John Hemming) and still aims to publish its report by June 2019. CTG’s response to the Call for Evidence can be read here.