The Charity Commission has published new guidelines setting out its regulatory position on the use of fiscal reliefs available to charities and on the fine distinction between:
‘reasonable and prudent tax planning’, which remains consistent with a charity’s trustees’ fiduciary duties; and
arrangements which are likely to constitute abusive tax avoidance, and which could result in reputational damage and would undermine trustees’ duty to act in the best interests of their charity—examples of arrangements that have been considered to be tax avoidance, in breach of trustees’ duties and responsibilities, are set out in part 3 of the guidance.
Charities must not, the guidance emphasises, engage in, or be associated with, any form of tax evasion or tax fraud (which, the Charity Commission reminds its readers, is illegal).
The Charity Commission states that it considers tax fraud, evasion and avoidance to be an issue within its regulatory remit and that it will use its powers (under sections 54 to 59 of the Charities Act 2011) to exchange information with HMRC where it has concerns about such activities carried out by charities.
In July 2014, following a consultation triggered by a series of high profile public cases, the government decided against the introduction of a statutory test which would have allowed HMRC to refuse recognition of charitable status to charities established for tax avoidance purposes, on the grounds that such a test ‘would have a disproportionate and unacceptable effect upon the charity sector and legitimate donors’.
The Charity Commission has published new guidelines setting out its regulatory position on the use of fiscal reliefs available to charities and on the fine distinction between:
‘reasonable and prudent tax planning’, which remains consistent with a charity’s trustees’ fiduciary duties; and
arrangements which are likely to constitute abusive tax avoidance, and which could result in reputational damage and would undermine trustees’ duty to act in the best interests of their charity—examples of arrangements that have been considered to be tax avoidance, in breach of trustees’ duties and responsibilities, are set out in part 3 of the guidance.
Charities must not, the guidance emphasises, engage in, or be associated with, any form of tax evasion or tax fraud (which, the Charity Commission reminds its readers, is illegal).
The Charity Commission states that it considers tax fraud, evasion and avoidance to be an issue within its regulatory remit and that it will use its powers (under sections 54 to 59 of the Charities Act 2011) to exchange information with HMRC where it has concerns about such activities carried out by charities.
In July 2014, following a consultation triggered by a series of high profile public cases, the government decided against the introduction of a statutory test which would have allowed HMRC to refuse recognition of charitable status to charities established for tax avoidance purposes, on the grounds that such a test ‘would have a disproportionate and unacceptable effect upon the charity sector and legitimate donors’.
