HM Revenue & Customs promises overseas projects tax guidance

Advice on the tax status of charity projects overseas, which was promised last year, will be published soon, says senior HMRC official

HM Revenue & Customs
HM Revenue & Customs

HM Revenue & Customs will produce clearer guidance on the tax status of charity projects overseas, a senior tax official promised delegates at the Charity Finance Directors' Group tax conference last week.

The Finance Act in April 2010 contained a change to the law – that overseas expenditure by charities might be considered non-charitable, and therefore liable for tax, if organisations have not taken "such steps as HMRC considers are reasonable" to ensure funds are used for charitable purposes.

HMRC promised in July 2010 that the guidance would appear "within weeks". It has still not appeared.

Cathy Wilson, policy adviser on charities at HMRC, said last week that her department would "start to work on that guidance in the next two to three weeks".

She said work would have begun earlier, but "we have to put our hands up – we just haven't had time".

Rosamund McCarthy, a partner at the law firm Bates Wells & Braithwaite, said existing guidance did not do the job charities needed from it. "At the moment, HMRC can say anything is or isn't reasonable and no one can argue," she said.

It was important, said McCarthy, that when guidance did appear it was proportionate, so that funders without sufficient resources to carry out detailed checks could continue to put money into overseas projects.

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