Finance Act 2010
Changes to NGO Financial Reporting Requirements
The Finance Act 2010 introduced a significant change into the regulation of payments by charities to overseas bodies. It is important for Bond members, because they run the risk of losing tax relief on payments to overseas organisations if they do not comply.
Under the old regime, payments to overseas bodies were classified as charitable and attracted tax relief, if the trustees of the charity considered that they had taken reasonable steps that the money would be used for charitable purposes. Now, however, payments will only attract tax relief if the trustees have taken such steps as HMRC considers are reasonable in the circumstances. Since the amendment took effect, HMRC has updated its guidance on reporting of payments to overseas bodies and provided some examples of what it expects in different scenarios. It is expected that some further examples will be added over the next few week. For more information see the ‘Law and Regulation' pages in the ‘Sector' section of the Bond website which has links to the HMRC website.
Bond does not oppose the amendment as we believe that it supports policy goals that we share with the government: that charities should pay their taxes, that the government should protect society from the terrorist threat and that charities should be transparent and accountable. However, we are very concerned that such regulation should be proportionate, clear and easy to implement. It may be that the amendment will in practice not affect larger Bond members, who already have appropriate procedures in place. Small and medium sized NGOs, however, may find meeting the new requirements more challenging and I would be very pleased to hear from any members with their views about the amendment and whether - or not- they have difficulties complying. HMRC has left the door open for further meetings with Bond and other sector platforms, with a view to clarifying and changing the guidance further, and it would be very helpful for me to have as much input as possible from members in these discussions.
Read the updated HMRC guidance on reporting of payments to overseas bodies
Read the detailed guidance on the 'Fit and Proper Persons Test'
Photo: Peter_W
