CFDG and CTG triumph in transitional relief worth circa £300 million to sector

12th March 2008

CFDG and CTG have today seen their calls for transitional relief for Gift Aid answered. The government's response to the Gift Aid consultation published today announced that it would provide transitional relief to the sector on Gift Aid claims at a rate of 22% for the next three years. The government estimates that this transitional relief is worth £300 million to the sector.

Keith Hickey, CEO of CFDG said: "We are really pleased that government has listened to our concerns and responded in this way. 88% of respondents to a CFDG survey last year on Gift Aid supported the move for transitional relief."

Helen Donoghue, Director of CTG said: "This transitional relief is vital for many charities that have complex forward expenditure plans based on their Gift Aid income."

Elsewhere in the government response to the Gift Aid consultation CFDG welcomed the move to simplify the audit process whereby charities can now go back and repair errors at audit before HMRC extrapolates the error rate across the Gift Aid claim.

In addition, the government set a de minimis error level of 4% that has the aim of reducing the fear of audit. However, this de minimis level is not all it seems at first glance and Keith Hickey said: "It is good news that with an error level of under 4% there will be no recovery in prior years; however, it is slightly disappointing that unless amount involved is under £100 there will be a recovery in the year of the audit."

The government has not ruled out the proposal put forward by a coalition of charities that included Charity Tax Group, acevo, CFDG, NCVO, National Church Institutions and the Institute of Fundraising which called for an accounts based method that allows a charity to base Gift Aid on total voluntary income as recorded in the independently examined or audited accounts. The government response to the Gift Aid consultation commits to "continuing to work with donors and charities to develop understanding and use that to inform further thinking about Gift Aid."

Separately CTG, after vigorous campaigning, were pleased to see that government has committed to repeal certain outdated and complex anti-avoidance provisions on bond washing.

CFDG and CTG are disappointed that the staff hire concession is to be withdrawn from 1 April 2009. This currently allows employment businesses to charge VAT solely on the margin of their supplies. This will have a significant impact on the Charity Sector. One member has told CFDG it will cost them £300k per annum.

Finally both CFDG and CTG were pleased to see that there will be an HMRC consultation on the current difficulties around the substantial donor legislation that both organisations have raised.

- Ends -

Notes to the Editor:

1. The Charity Finance Directors' Group was set up in 1987 and is an umbrella group that specialises in helping charities to manage their finance-related functions.

2. CFDG's 1,450 members are responsible for the finances of charities with a wide variety of income levels. Between them our members manage some £13.7 billion in charity income per year.

3. The Charity Tax Group (CTG) was set up in 1982 to make representations to Government on charity taxation. It has since become the leading voice for the sector on this issue and it is supported by a strong membership of 400 charities of all sizes, representing every type of charitable activity. It also has 25 'observer members': professional accountancy and law firms that deal regularly with tax issues for the sector. For further information please contact Mathieu Mori on tel: 020 7222 1265 or email: mathieu.mori@centrallobby.com or helen.donoghue@centrallobby.com

 

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