UK charity tax reliefs extending to European organisations - CIOT

Ref: EUHR27 April 2010Mr Andrew EdwardsCharities Policy and Offshore Personal Tax PolicyHMRC - CARRoom G54, 100 Parliament StreetLondon SW1A 2BQvia e-mail: andrew.edwards@hmrc.gsi.gov.ukDear AndrewExtending UK charity tax reliefs to certain organisations in EuropeFollowing our recent correspondence with you (our letter dated 17 July 2009), wewere pleased to see the changes announced in the Budget.Budget Note 32 announced the extension of UK charitable tax reliefs to certainorganisations equivalent to UK charities and CASCs in the EU and EuropeanEconomic Area countries as a result of the ECJ Persche decision in January 2009.We welcome this extension, which is reflected in section 30 and Schedule 6 of theFinance Act 2010, effective from 6 April 2010 as per Schedule 6 paragraphs 33-35,but, for Part 2 (including corporation tax), from a date to be specified in regulations.However, we remain concerned about HMRC’s position in relation to claims arisingfor donations made before these changes were announced.Paragraph 5 of Budget Notice 32 says that claims made after the date of the ECJjudgment on 27 January 2009 and before 1 April 2010 will be considered on a caseby case basis (emphasis added).We do not think that this is right. All past claims should be considered on their ownmerits and in accordance with what (under the declaratory principle of case law andhaving regard to the European Communities Act 1972 sections 2(1) & (4)) the ECJ,in Persche, held that the law should be and should have been, subject to enforceableUK time limits. The UK Government cannot give itself a time limit applying from thedate of the judgment. The ECJ did not suggest that its finding that an EU memberstate must allow a tax deduction for donations, whether in cash or kind, to a charityestablished in another EU member state should have a temporal limitation.The fact of the matter is that the law in the UK was incorrect both before and afterthat judgment was handed down, and we are strongly opposed to statements suchas that in Budget Note 32 which purports to limit the rights of taxpayers withoutjustification.

Extending UK charity tax reliefs to certain organisations in EuropeCIOT comments 27 April 2010We suggest that HMRC make a further announcement clarifying the position andpublicising the rights of taxpayers correctly.We look forward to hearing from you.Yours sincerelyNigel EastawayChairman, EUHR Sub-Committeecc: Charity Policy Tax Team, HMRC - charitypolicy.taxteam@hmrc.gsi.gov.ukThe Chartered Institute of TaxationThe Chartered Institute of Taxation (CIOT) is a charity and the leading professionalbody in the United Kingdom concerned solely with taxation. The CIOT’s primarypurpose is to promote education and study of the administration and practice oftaxation. One of the key aims is to achieve a better, more efficient, tax system for allaffected by it – taxpayers, advisers and the authorities.The CIOT’s comments and recommendations on tax issues are made solely in orderto achieve its primary purpose: it is politically neutral in its work. The CIOT will seekto draw on its members’ experience in private practice, Government, commerce andindustry and academia to argue and explain how public policy objectives (to theextent that these are clearly stated or can be discerned) can most effectively beachieved.The CIOT’s 15,000 members have the practising title of ‘Chartered Tax Adviser’.P/tech/subsfinal/EUHR 2 27.4.10