Charitable trusts are set to be granted an exemption from proposed reporting requirements as part of measures designed to prevent money laundering or the financing of terrorism.
Last year's HM Treasury consultation on introducing rules contained in the European Union's Fifth Money Laundering Directive into UK law assumed that charitable trusts of all sizes would have been required to register with HM Revenue & Customs’ Trust Registration Service
Experts, including the Charity Tax Group, warned at the time that the requirement to register would introduce a “significant new layer of regulation”.
But a new consultation, launched by HM Revenue & Customs on Friday, proposes that charitable trusts should not be required to register because the risk that these trusts are used for money laundering or financing terrorist activity is low.
John Hemming, chair of the Charity Tax Group, which campaigned for an exemption for charities from the requirement to register, said the proposal was “a great outcome for charities”.
He said: “This is a great example of common sense prevailing, particularly as the rules would otherwise have applied regardless of whether or not the trust has incurred a UK tax consequence.
“We are aware that very small charitable trusts, including those that are excepted from registration with the charity regulators, could have been caught, which would have been unduly onerous, given their limited resources.”