One of our Observer members made us aware of a recent change in the HMRC Charities Guidance around authorised official. We would like to highlight some of the potential issues which could arise.

Because there is some uncertainty around the new guidance, CTG is raising this with HMRC and will ask them to clarify the position as soon as possible.  In particular, we are concerned that the change has been brought in without consultation and an implementation period. We think it unlikely that HMRC have fully thought through the implications of what they are suggesting and how most charities will be made aware of the change.

What does the new section say?

The new section reads as follows:

“6.3.9 If an authorised official who is not a trustee of the charity completes and signs the charity’s tax return, this must be countersigned by a trustee of the charity.”

Why is this confusing?

Without any additional narrative, it is not entirely clear whether this change in guidance refers to Gift Aid claims, as well as charity Corporation Tax/Trust Tax returns.

How would you apply this new guidance in practice?

Aside from the question around which returns this applies to, whist in a very small charity it may well be one of the Trustees who prepares and submits any returns to HMRC, in a larger charity this is very unlikely. Instead, there will usually be a scheme of delegation giving the finance director/CFO and/or their team the power the file these returns on behalf of the charity.

Whilst some of the trustees in a large charity may be qualified accountants, it would be unusual for them to be involved at this level, making it an unwelcome and unhelpful administrative hurdle for them to personally sign off a tax return.

Is it possible to have two signatures where returns are filed electronically?

If a trustee is required to countersign a return it is not clear in practice how a dual signature would work where a return is filed electronically.

So, this new guidance has brought about considerable uncertainty and in its present form poses a number of practical challenges. We hope that HMRC are able to assist with both interpretation and addressing the practical issues. We will report back when we hear from HMRC.