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The Charity Finance Directors' Group (CFDG) and a group of finance directors from leading charities have raised a number of taxation concerns with HMRC.
In a meeting with the Revenue, CFDG delegates asked that sponsorship be regarded as part of the primary purpose trade of charities, to avoid the need for many organisations to set up a subsidiary company.
An alternative option given was to raise the small trades exemption limit from £50,000, because this figure has not been raised in the memory of CFDG members.
HMRC agreed to consider the ideas and to investigate the possibility of getting greater consistency between corporation tax and VAT rules on sponsorship and other areas of taxation.
The charities were concerned that VAT policies discourage collaboration in the sector at a time when joint working is most needed. They believed they would be helped if they were able to find savings in the current recession by combining their back-office functions, instead of becoming liable to irrecoverable VAT.
This liability arises because VAT has to be charged by one charity to the other for these services. HMRC agreed to look at the issue in the light of EU legislation.
The new iXBRL filing requirements, which mean that charitable companies will have to file their documents online for the 2010 year ends, were also a source of concern for CFDG members.
The lack of awareness in the sector of the requirements and the lack of time for compliance may result in a large number of charities failing to meet the deadline required, said the charities.
HMRC agreed to look into improving the guidance and taking into account the needs of charities.
