The row over HMRC's new powers wrt withdrawing tax relief from any charity, if it feels that any of the charity's senior employees or trustees is untrustworthy, has pushed HMRC into revising its stance on the issue.
HMRC has backtracked, and issued revised guidance released last week. In the new guidance HMRC have removed the statement that all cheque signatories would be considered "managers", and therefore subject to the test.
The new guidance says:
"Most large charities have a board of trustees and an executive board of senior employees. In such cases the trustees and members of the executive board would be managers of the charity."
However, as Civil Society reports, there is still disquiet in the charity sector over the powers that HMRC may think that it can use.
Clive Cutbill, head of the charities and philanthropy team at Withers, is unconvinced and is quoted:
"It seems unlikely at this stage that any future revised guidance will limit the scope of the new test to charity trustees alone since the fraud risk HMRC has identified extends also to persons with control of charitable assets.
If the guidance continues to refer to 'managers' being all those with control over charitable assets, it will be difficult for charities to decide with certainty how far this control test goes and whether those who determine charity budgets (or who manage petty cash) will be caught.
HMRC's wide interpretation may be open to legal challenge and this, combined with pressure from sector groups, may in time lead HMRC to amend its guidance further."
A recipe for confusion, doubtless we can expect further revised statements from HMRC on this matter.
Tax does have to be taxing.
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