A former chairman of the Inland Revenue will lead a group set up by the National Council for Voluntary Organisations to make recommendations to government on how it might reform the charity tax system.
Sir Nicholas Montagu, who chaired the Inland Revenue between 1997 and 2004, shortly before it merged with HM Customs & Excise to become HM Revenue & Customs, will lead the NCVO’s Charity Tax Commission, the umbrella body has announced.
The commission, which was announced earlier this year, will carry out a full review of the charity tax system and the estimated £3.7bn worth of charity tax reliefs, then submit recommendations for reform to the government.
Montagu will be supported by five commissioners who have experience of the charity sector or fiscal policy.
They are: Sarah Atkinson, director of policy, planning and communications at the Charity Commission; Dan Corry, chief executive of the think tank New Philanthropy Capital; Pesh Framjee, head of not-for-profits at Crowe Clark Whitehill and a special adviser to the Charity Finance Group; Clare Pelham, chief executive of the Epilepsy Society; and Lynne Oats, professor of taxation and accounting at the University of Exeter Business School and co-director of the university’s Tax Administration Research Centre.
The Treasury and HM Revenue & Customs will also attend the commissioner as observers, and another commissioner might be announced shortly, the NCVO said.
The commission will meet for the first time later this week and should complete its work in the next 18 months, with the aim of informing the Inquiry Into the Future of Civil Society, which is chaired by Julia Unwin and is expected to report in 2019.
The tax commission is the first comprehensive review of charity tax since 1997, according to Montagu.
"My aspiration is for the commission’s proposals to inform future changes to the tax system such that it can continue to support charities’ work as effectively as possible," he said.
"I look forward to drawing up pragmatic proposals that will appropriately balance the need for a fair and efficient tax system with the important role that we want charities to continue to play in society."
In response to the NCVO’s announcement, Caron Bradshaw, chief executive of the CFG, said: "This commission comes at a critical time for our sector and carries a heavy weight of responsibility. We believe the commission should ensure that the proposals it puts forward deliver significant positive change for charities.
"We urge it to be brave and bold; now is not the time for tinkering. We have long argued that the tax bill for our sector is too high, and we look forward to hearing how the commission proposes this burden can be reduced."
John Hemming, chair of the Charity Tax Group, said the commission "offers a further opportunity to challenge the anomalous tax position charities often find themselves in, particularly in respect of VAT".
He said: "It is essential that charity tax reliefs keep up with societal and technological developments, or they may become obsolete. We look forward to working with the commission and recommend that future-proofing tax reliefs for charities be one of its major areas of focus."