Earlier this month, HM Revenue & Customs launched a consultation on the laws (Third Sector Online, 15 July). It is proposing to increase the amount of money a donor needs to give to be classed as 'substantial' and to cut the amount of time for which charities need to keep records.
But the proposed changes would still cause problems for charity accountants, according to Nick Brooks, head of not-for-profit at accountant Kingston Smith.
"I don't believe this goes far enough," said Brooks, who has called on the Government to scrap the legislation and start again (2 July, page 1). "There would still remain a huge administrative burden on charities.
"Part of the problem is that we don't know what HMRC is trying to achieve. We don't know the type or scale of the problem it thinks it has."
Nicola Evans, charity support lawyer at Bircham Dyson Bell, also said the legislation should be abandoned and redrafted.
"It's very positive that this consultation is taking place, but there are fundamental problems with this legislation that need to be solved," she said. "For one, it attacks charities rather than donors, who are the ones who benefit."
Stephen Mathews, head of accountancy and consultancy services at Christian finance charity Stewardship, said the proposed new rules were still unworkable.
"A charity providing charitable loans as part of its support would still have to track all substantial donors and their 'connected persons', who may come to many hundreds of individuals and organisations over a 12-year period," he said.
- Charities are punished if substantial donor rules are broken, not donors
- The penalty can be more than the original donation
- Charities are often required to monitor all the required individuals - often hundreds of people per donation
- Records must be kept for up to 12 years under the new proposals.