Legal update: Charity Commission consults on changes to annual return

The government has also dropped proposals to change the definition of a charity for tax purposes, writes Adrian Pashley

Recent legal developments include the trialling of digital charity registration for tax purposes, writes Adrian Pashley
Recent legal developments include the trialling of digital charity registration for tax purposes, writes Adrian Pashley

Proposals for the 2015 annual return The Charity Commission is consulting on the additional information that it will collect from charities in its annual return, a change that will come into force in 2015. This information includes how much charities spend on campaigning activities, how much of their income comes from public service delivery and whether they have remuneration policies for their executive staff. The consultation closes on 12 August.

No change to definition of charity for tax purposes The government has dropped proposals to change the definition of a charity for tax purposes. It had proposed introducing a "purpose of establishment condition" to outlaw extreme cases where charities are established to abuse charity tax reliefs. Sector feedback said the proposals would have had a disproportionately negative effect.

Digital charity registration for tax purposes trialled HM Revenue & Customs is trialling its new online service for applications to register as a charity for tax purposes. In 2013 it launched a service to enable tax reclaims including gift aid to be made online. However, a charity must already be registered with HMRC in order to make such a claim and, until now, this has been possible only by submitting the paper form ChA1.

Tax reliefs extended to Liechtenstein charities UK tax reliefs and exemptions for charities are available to organisations in member states of the EU, plus Iceland and Norway, provided the charities meet certain conditions. The Taxes (Definition of Charity) (Relevant Territories) (Amendment) Regulations 2014, which came into force on 31 July, extend the reliefs to eligible organisations in Liechtenstein.

Recent court decisions In a case involving a dispute between two groups of Sikhs and the trusteeship and governance of two places of worship, the Supreme Court overturned a Court of Appeal decision and ruled that disputes about religious doctrine or practice are capable of being determined by the courts if they engage civil rights or interests or reviewable questions of public law. A court might have to determine such issues as are capable of being objectively ascertained (Shergill and others v Khaira and others [2014] UKSC 33).

The First-tier Tribunal (Charity) has held that its power to grant remedies on an application to review a commission decision is discretionary, giving a charity the right to challenge the lawfulness of a decision to open an inquiry into it despite the inquiry having been closed prior to the hearing (Trustees of the Ethiopian Orthodox Tewahedo Church St Mary of Debre Tsion London v Charity Commission).

The same court also allowed the Human Dignity Trust's appeal against a commission decision refusing to register it as a charity. The tribunal has said the decision is case-specific, but it does provide helpful guidance on the scope of human rights as a charitable purpose (Human Dignity Trust v Charity Commission).

This column is written by Adrian Pashley, charities editor at Thomson Reuters, Practical Law, on behalf of the CLA.

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