Substantial donor legislation to be reformed soon

HM Revenue & Customs is expected to propose changes to laws governing donations from major funders in the Autumn

HM Revenue & Customs is expected to propose a series of reforms to substantial donor legislation during the autumn.

The proposals were developed with a series of focus groups that included charities, accountants, lawyers and major donors themselves, and examined how the legislation could be made more effective.

Substantial donor legislation penalises charities if they make payments to anyone who has made a donation of £25,000 to the organisation in a single calendar year.

It has been criticised by sector experts, who say many charities are unwittingly caught by it, and that many could be disproportionately penalised for making legitimate transactions.

"We've held several meetings in quick succession," said Nick Brooks, head of not-for-profit at accountancy firm Kingston Smith and one of the focus group members.

"It's been very productive as far as we're concerned, although there are still several hoops that have to be jumped through before anything can be changed."

Brooks said he thought charities need not worry about the legislation as long as they had no intent to carry out fraudulent activity.

"The legislation is there to stop wrongdoing, and if wrongdoing exists it can still be punished," he said. "But I think transactions in good faith should be safe."

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