Charities can benefit from a significant range of tax reliefs, but they have always been subject to significant taxation, and the burden has been increasing in recent years.
The evidence for this is set out in illuminating detail in the Charity Tax Map, published by the Charity Tax Group last week. The group's chair, John Hemming, says that charities have to deal with ten times as much tax legislation as they did a decade ago.
This notable piece of research will serve to bolster the argument by the group and others organisations for the sector's tax burden to be lightened. The argument is not just about the size of payments, which in the case of general charities and universities is between 4 and 6 per cent of their combined income; it's also about how much time and effort they have to put in. The report says, for example, that the 31 charities surveyed pay £2,600 in corporation tax but spend £73,000 complying with it.
This suggests that HM Revenue & Customs is fairly zealous in its pursuit of charities, as does the impending Upper Tribunal case, where it is claiming £9m in corporation tax from a housing association charity that was operating charitably but had failed to register with the Charity Commission for its first two years. Zeal by HMRC is of course in everyone's interests, but there is a balance to be struck.
The consistent advice from officials is that charities would do well to abandon more difficult causes, such as wider VAT relief, and concentrate instead on maximising Gift Aid. On VAT, the sector should in fact keep up selective pressure at least - there is a strong case for the tax to be relaxed in the case of charities that provide joint services, for example.
On Gift Aid, the tax map shows that the cost of claiming it varies widely and is more onerous for smaller charities, partly because of manual processing. Ministers say they are serious about reducing red tape for charities, and they could do with some good news to put out on the big society front. Work is in hand on an online system for claiming Gift Aid, and they could claim an easy win by making a firm commitment and speeding it along.