Charity Commission and HMRC should have a single registration process, says Lord Hodgson

The Conservative peer, who last year carried out a review of the Charities Act, says the existing system is burdensome and lacks transparency

Lord Hodgson of Astley Abbotts
Lord Hodgson of Astley Abbotts

The Charity Commission and HM Revenue & Customs should have a single joint registration process for charities, according to Lord Hodgson of Astley Abbotts, the peer who last year led a review of the Charities Act 2006.

Hodgson’s comments come after a highly critical Public Accounts Committee hearing into the Cup Trust tax-avoidance scheme last week at which Margaret Hodge, the chair of the committee, described the existing registration system as "hopeless".

The current system is for a new charity to register first with the commission, then separately for Gift Aid with HMRC.

Hodgson told Third Sector that the report he wrote after his review of the Charities Act, Trusted and Independent: Giving Charity Back to Charities, had recommended an end to this process.

The report said that the system "imposes an unnecessary burden on charities and should be addressed" and that "it surely cannot be impossible for a joint registration form that meets both organisations’ requirements to be devised".

Hodgson said that any single registration process should incorporate the fit and proper person test, which HMRC currently applies to charity trustees and managers only after a charity has already registered with the commission.

"If HMRC finds that someone isn’t fit to be a trustee, it would be useful for the commission to know," he said.

Hodgson said every charity that claims Gift Aid should be registered with the commission. About 180,000 charities in the UK are regulated by the commission but do not have to register with it – all of them are entitled to register with HMRC for Gift Aid.

Tens of thousands of these are 'excepted charities', mostly churches and chapels that have incomes of less than £100,000. There are also about 100,000 charities that do not have to register because their incomes are less than £5,000.

"I’ve recommended that everyone with an income more more than £25,000 should have to register, that anyone should be able to register and that anyone claiming tax relief should have to register," said Hodgson. "This is a question of transparency. Anyone in receipt of Gift Aid should be on the commission website.

"The taxpayers are subsidising them, and the taxpayers are entitled to know about them. We want to encourage charities, but we must impose some restrictions and responsibilities on them."

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