No foreign organisations recognised as charitable for tax purposes in the past year, HMRC figures reveal

Nick Aldridge of MissionFish UK says the government has exaggerated the threat of fraud involving foreign charities

Nick Aldridge
Nick Aldridge

Not one foreign organisation had been recognised as charitable for tax purposes in the past year, according to new figures released by HM Revenue & Customs.

According to a reply to a Freedom of Information request from Nick Aldridge, chief executive of MissionFish UK, the charitable arm of the auction website eBay, HMRC received 40 applications in the year up to 10 May. Most of these have been rejected, while a few are still being considered.

An HMRC spokesman told Third Sector that "a very small number" of foreign charities had been granted the right to receive tax relief in the UK since it became possible for them to register in April 2010.

He said that many of the rejected organisations were not genuine charities but attempts at fraud. "We are seeing linked and coordinated strikes which indicate organised gangs of fraudsters," he said.

In an impact assessment published in 2010, used to justify the introduction of a "fit and proper persons" test in the Budget, HMRC estimated extending tax relief to European charities would cost up to £200m a year, most of it fraud. However, payments to foreign charities have been only a small fraction of this.

Aldridge said the government had on several occasions used the fraud threat from foreign charities as a justification for new legislation, including the "fit and proper persons" test, which he said had cost charities "many millions" of pounds in extra paperwork.

In April, a spokesman for the Prime Minister, David Cameron, defended the proposed introduction of a tax cap for major donors, which was scrapped last month, by suggesting it was needed to regulate large donations to foreign charities, saying the tax relief "does not just apply to charitable organisations that operate here".

But Aldridge said the evidence suggested HMRC was able to protect itself from fraudulent European charities and did not need any further powers to deal with the problem.

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