It seems that our "respected" MPs have foisted another piece of bureaucratic tax legislation upon us that will do nothing to lessen fraud, but will do everything to increase the bureaucratic burden on legitimate charities and their trustees.
Third Sector reports that a new measure introduced in the Finance Act earlier this month, designed to ensure that tax relief is not given to bogus charities, is too loosely worded and gives HMRC too much power.
The legislation gives HMRC the power to carry out a 'fit and proper persons' test, every time a charity hires a new trustee or senior manager. If a trustee fails to pass the test, the charity can be denied tax relief.
Sam Macdonald, partner at law firm Farrer & Co, is quoted:
"Charities will never really know whether they are entitled to tax relief or not.
HMRC has said 'you'll have to trust us', but that's not a reassuring basis on which to continue."
Bill Lewis, tax consultant at Bates Wells & Braithwaite, said:
"HMRC should have consulted on the legislation before introducing it.
This is more unnecessary paperwork, and penalises only the innocent. The red tape this produces will have no effect on fraudsters, but it will cause trouble for law-abiding trustees."
Simon Weil, partner at Bircham Dyson Bell, said:
"This is dangerously subjective legislation. I think the sector needs to fight for its independence."
Poorly drafted legislation giving more powers to an unelected bureaucracy is a dangerous combination.
Tax does have to be taxing.
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