Charity Tax Group (CTG) Charity Members Virtual Meeting 22 September 2020 @CharityTaxGroup #charitytax The voice of charities on Tax
VAT updates CTG research project to quantify the value of VAT reliefs for charities • VAT implications of temporary change of RCP/RRP use • VAT and digital advertising – what you need to know • VAT and e-publications – zero rating fast-tracked • VAT treatment of DfID grants and other similar funding • Making Tax Digital – digital links deadline extended • VAT deferral – next steps and repayments • The voice of charities on Tax
Gift Aid and other tax developments Updates from the Gift Aid practical issues working group, including • Facebook Donate and Gift Aid Emergency Relief Business Rates Review (England) • 9 month period for payment of Gift Aid by trading subsidiaries • Retail Grants – state aid issues • COVID-19 funding/support updates • The voice of charities on Tax
CTG research project to quantify the value of VAT reliefs for charities ▪ Report to be published shortly. Highlights include ▪ A significant increase in the level of irrecoverable input VAT ▪ A much clearer estimate of the value of VAT reliefs ▪ Improved understanding of impact of output VAT on charities ▪ New tool will help to model the impact of VAT reform ▪ Findings will help inform CTG lobbying on VAT – proposals could include lower rate for all charitable inputs, to be charged by suppliers The voice of charities on Tax
VAT implications of temporary change of building use due to COVID-19 ▪ Evidence of charities/universities changing the use of buildings due to COVID-19 related use ▪ Concerns about RCP/RRP status if 5% non-business use breached ▪ HMRC will adopt a case-by-case approach but indicate they will be flexible if certain criteria are met e.g. t hat the building is “loaned” for little or no charge and the change is temporary ▪ Feedback from charities requested ▪ In the long-term, CTG would like HMRC to consider a more flexible approach to the RCP rules, which can risk limits to collaboration The voice of charities on Tax
VAT and digital advertising ▪ Previously all digital advertising regarded as VATable by HMRC ▪ CTG lobbying has led to HMRC Brief confirming ▪ VAT zero rate for internet search browsing advertisements including ‘Location Targeting’ ▪ VAT standard rate for ‘social media’ and ‘subscription website’ advertising ▪ Next steps – please consider supporting CTG! ▪ Litigation to challenge HMRC position on social media advertising ▪ Lobbying HMRC and DCMS to change VAT legislation The voice of charities on Tax
VAT and e-publications ▪ Supplies of e-publications VAT zero rated from 1 May 2020 – fast tracked due to COVID-19 ▪ VAT Notice 701/10 provides detailed guidance, but was introduced without consultation ▪ CTG would welcome feedback from charities with outstanding questions or practical issues so these can be raised with HMRC The voice of charities on Tax
VAT treatment of DfID grants etc ▪ CTG sought clarifications from HMRC re VAT treatment of humanitarian and associated funding including DfID and GCRF ▪ HMRC officials have provided useful updates on funding received from governmental and intergovernmental organisations and more generally on Back to Back grant funding arrangements. Full details on the CTG website ▪ Updated HMRC guidance to follow shortly ▪ This guidance will help to identify areas where additional VAT recovery may be possible and also identify transactions to which the reverse charge procedure does not apply The voice of charities on Tax
Making Tax Digital ▪ All VAT registered charities required to make submissions to HMRC using API ▪ Requirement to implement digital links postponed until April 2021 ▪ Don’t leave it until the last minute – plan ahead. If implementation is not possible – contact HMRC to request an extension (must be genuine reasons – not just lack of preparedness) ▪ Spreadsheets can continue to be used – third party software also available ▪ Some manual adjustments still permitted, including for partial exemption ▪ CTG continuing discussions with officials on practicalities of implementing digital links – please provide feedback The voice of charities on Tax
VAT deferral – next steps and repayments ▪ The VAT payment deferral period ended on 30 June 2020. ▪ Charities need to: • Set-up cancelled direct debits in enough time for HMRC to take payment • Submit VAT returns as normal and on time • Pay the VAT in full on payments due after 30 June ▪ Any VAT payments deferred between 20 March and 30 June should be paid in full on or before 31 March 2021. Charities can make additional payments with subsequent returns ▪ Charities should contact HMRC ASAP if they are unable to pay the VAT due The voice of charities on Tax
Q&A Please provide feedback on this session to info@charitytaxgroup.org.uk The voice of charities on Tax
Charity Tax Group (CTG) Charity Members Virtual Meeting 22 September 2020 @CharityTaxGroup #charitytax The voice of charities on Tax
Updates from the Gift Aid practical issues working group ▪ Gift Aid Emergency Relief proposals : CTG is calling on the Government to temporarily increase the level of Gift Aid that can be claimed on donations. Raising Gift Aid from one-quarter to one-third on donations, could secure £millions for charities and benefit 70,000+ charities. Strong technical case and precedent for temporary relief – now we need to secure political support. Pledge support https://www.cafonline.org/about-us/caf- campaigns/giving-for-the-uk/gift-aid-emergency-relief ▪ Future of Gift Aid project : Important initiative, in collaboration with HMRC’s innovation team and intermediaries to explore ways to automate Gift Aid and ensure it is fit for the future and can adapt to modern payment and fundraising mechanisms. Important opportunity to maximise eligible Gift Aid and stop erroneous claims The voice of charities on Tax
Updates from the Gift Aid practical issues working group ▪ Gift Aid on donations received via third party fundraising platforms: an emerging and important issue for many charities, with limited guidance currently available. HMRC working with Facebook and charities to confirm Gift Aid audit trails are in place. Claims can be made if charities are confident they have sufficient information to reconcile payments to Gift Aid Declarations. GDPR considerations important too ▪ Gift Aid Awareness Day (8 October 2020): CTG is working with CFG and other sector partners to promote this initiative. Campaign pack now published and webinars planned The voice of charities on Tax
Business Rates Review (England) ▪ Fundamental review including questions on rates reliefs and exemption, valuation and administration ▪ Charity rates relief worth £2bn to the sector so vitally important ▪ CTG response highlighted the importance of the relief and the need to maintain the status quo as a minimum ▪ We recognised the need to address concerns about fraud, but call for these to be proportionate and targeted ▪ Important that the charity sector understands pressures from other sectors for reform of business rates relief and continues to be vocal in this debate The voice of charities on Tax
9 month period for payment of Gift Aid by trading subsidiaries ▪ CTG is supporting proposals to extend the 9 month time limit for payment of Gift Aid payments from trading subsidiaries to parent charities, due to the impact of COVID-19 ▪ Feedback from charities on their own experiences would be welcome ▪ A paper is due to be submitted to the HMRC Charity Tax Forum and we would welcome feedback from charities on the value and importance of this proposal The voice of charities on Tax
Retail Grants ▪ The Retail Grants have provided important funding to charity premises required to close during the COVID-19 lockdown ▪ Known to have been particularly helpful for scout groups, village halls, charity shops and heritage properties ▪ However, state aid rules limit claims by charities to 30 properties ▪ Positive CTG, CRA and charity campaign to persuade BEIS to remove these state aid restrictions. Constructive discussions with officials, but no confirmation of Ministerial support yet The voice of charities on Tax
COVID-19 funding/support updates ▪ Job Retention Scheme/Bonus: The Job Retention Scheme is scaling down and will close at the end of October. The CTG website includes extensive resources on the Scheme. A £1,000 Job Retention Bonus is available for all furloughed employees that have been continuously employed to the end of January 2021 ▪ Charity/sector-specific support packages: Extensive information is also available on the CTG website, with the most notable recent announcement being the Culture Recovery Fund. Feedback on which support packages/loans charities have used would be very helpful The voice of charities on Tax
Q&A Please provide feedback on this session to info@charitytaxgroup.org.uk The voice of charities on Tax
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