Technical

If the changes in your income and activities from the impact of COVID-19 have affected your VAT recovery rates under partial exemption there are various ways you may be able to address this.

From 1 January 2021 the old rules on state aid are replaced by the new subsidy control arrangements. The new rules and the old are explained in detail here.

With effect from 1 January 2021 there are changes to the VAT rules for cross border sales and purchases of goods and services. To facilitate the flow of goods and the collection of VAT, the government has introduced several changes to the UK’s import VAT regime.

The Charity Tax Group has recently published correspondence with HMRC on the VAT treatment of government funded overseas aid projects. The correspondence mainly deals with the issue of when such funding can be treated as outside the scope of VAT.

If your trading subsidiary has made losses since the previous year end you are required by the Companies Act to take extra steps before deciding what gift aid can be paid to the charity.

On 30 April 2020 the government announced it would bring forward the start date for the zero-rating of e-publications to 1 May 2020. Charities that apportion membership subscriptions under Extra Statutory Concession ESC 3.35 will be able to treat e-publications provided to members as zero-rated benefits with effect from 1 May 2020.

**IR35 changes to working with contractors delayed a year due to COVID-19**

It is common practice for organisations to use the services of contractors, either directly with individuals or through an intermediary company or agency. The use of contractors enables organisations to respond to demand for staffing resources without the need to increase permanent staff numbers. This may be particularly useful to fill resources on short term contracts or for specific pieces of work that require attention on an ad hoc basis.

Updated August 2020 Most VAT-registered charities and other businesses with annual taxable turnover of £85,000 or more have to submit VAT returns digitally and will need to link underlying records digitally soon. Download our article for more information on Making Tax Digital for VAT.
HMRC has substantially rewritten its (publicly available) internal guidance on how to decide whether a transaction is a grant or contract for VAT purposes. The new guidance provides much greater clarity on HMRC’s policy. The guidance contains useful lists of: “factors indicating the payment is a grant”; “factors indicating the payment is consideration for a supply”; and “factors that are neutral”.
The Museums and Galleries tax relief is a new relief available to organisations from 1 April 2017. Despite being a corporation tax relief, it can provide benefit to a charity, despite no tax being paid when they are undertaking new qualifying exhibitions.
From 6 April 2016 most unlisted UK companies (including charitable companies) are required to keep a register of persons with significant influence or control (‘PSCs’) over the company. If a company does not immediately know if it has any PSCs or who they are, it must take reasonable steps to find out. The PSC register must be kept up to date and sent to Companies House with the company’s annual confirmation statement (which replaces the annual return) from 30 June 2016 onwards.
At a workshop held at the Park Theatre in London in January 2016 a group of charitable London theatres and other arts organisations reached agreement with HMRC on guidelines for the design of Gift Aid compliant theatre patron/supporter schemes. The guidelines are non-binding on charities and HMRC and are subject to the outcome of the Gift Aid donor benefit consultation.
If you run shops and use the Retail Gift Aid Scheme (‘RGAS’) you need to take action over the substantial changes HMRC made to the guidance on 30 October 2015, such as mandatory training and internal checks. Full details of these changes can be found in this guidance.
In March 2015, the government announced changes to charity law that allow more charities to become audit exempt. The changes apply to financial years ending on or after 31 March 2015. If your charity has income between £500,000 and £1,000,000 and gross assets below £3,260,000 you may no longer require an audit.
From 1 January 2015 changes were made to the VAT “place of supply of services” rules for digital services. These changes affect UK businesses that supply, in return for consideration electronic, telecommunication or broadcasting services (‘digital services’) to non-business customers (“B2C”) in other EU states.
Many arts charities operate patron schemes, where supporters are offered packages of benefits that are designed to comply with the Gift Aid rules. A new tax tribunal case, Serpentine Trust, has highlighted that such schemes, whilst they may work for Gift Aid, can be problematic for VAT.
This is a VAT measure introduced in 2012 which allows charities to share services without incurring additional VAT costs. To take advantage of the VAT relief, a group of charities need to set up a cost sharing group (“CSG”). The group can then undertake services and recharge the cost to its members exempt from VAT provided various conditions are met.