# No new definition of charity for tax purposes

- Link: https://fundraising.co.uk/2014/07/02/new-definition-charity-tax-purposes/
- Published: 2014-07-02T13:30:59+01:00
- Author: Howard Lake

HMRC has confirmed that it will not introduce a new definition of charity for tax
purposes, following consultations with the charity sector. It considered doing so
in an effort to prevent charities being set up to avoid tax.

Following further consultation with an expert working group coordinated by the Charity
Tax Group (CTG),  which has over 500 members across all kinds of charitable activity,
it became clear that HMRC’s proposals were not sufficiently targeted and could have
unintended negative consequences for legitimate charities.

HMRC drew up a [discussion paper](http://www.hmrc.gov.uk/drafts/avoid-tax-charities.pdf),
but CTG successfully argued that both proposed solutions were not appropriate.

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Nicky Morgan, Finance Secretary to the Treasury and Minister responsible for charity
taxation, said:

> “I have made it clear throughout that we are not prepared to jeopardise the status
> of legitimate charities carrying out charitable activities. Considering the points
> raised, as well as further internal analysis of the impacts, HMRC has recommended
> not pursuing either of the options as they stand and I have agreed to this recommendation.”

Charity Tax Group Chairman John Hemming welcomed the decision. He said:

> “[Our members made it very clear to HMRC officials](http://www.ctrg.org.uk/files/?id=397),
> at a special expert group co-ordinated by CTG, that we did not support the need
> for a new legislative solution with members explaining how existing legislation
> provides effective safeguards against abusive activity. Ministers have accepted
> this argument”.

CTG urged HMRC to make better use of existing legislation to prevent charitable 
status being misused by fraudsters.

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