Tax law consultation on substantial donors launched

A consultation into the tax laws surrounding substantial donors to charities has been launched by HM Revenue & Customs.

The current rules mean that any transactions with substantial donors or people associated with them is disqualified from receiving tax relief.

The consultation document reads: "Charities and their donors are entitled to a generous package of tax reliefs worth in excess of £3bn. Unfortunately this generosity attracts not only those who wish to support charitable activities but also those who seek to gain a financial advantage by avoiding tax."

A delegation of charity tax experts, including the Institute of Chartered Accountants, the Charity Tax Group and Philanthropy UK, recently called for existing substantial donors legislation to be rewritten from scratch because it is so complex it is almost impossible for charities to obey (2 July, page1).

Nicola Evans, a charity support lawyer at Bircham Dyson Bell, welcomed the consultation's aim of exempting all legitimate transactions a charity enters into and minimising the administrative burden associated with keeping track of substantial donors. She said: "I hope as many charities and advisers will respond to the consultation to assist in achieving that aim."

The consultation runs until 7 October.

Paul Jump recommends

Consultation Document

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