When thinking about submitting a tax repayment claim or signing a tax return, it’s important to consider whether the person making the submission or signing the return is authorised to do so. This is especially important to check in the run-up to the deadline for making Gift Aid repayment claims.
Gift Aid claim deadline
Deadline for Gift Aid repayment claims – four years after the end of the tax year ending 5 April for charitable trusts or four years after the end of the company’s accounting period for charitable companies.
When a charity applies to HMRC to be recognised as a charity for tax purposes, it must provide details of up to two ‘authorised officials’ within the charity who manage its tax eg claim Gift Aid and file a tax return. The authorised official(s), who can be staff members, will be the person(s) HMRC will contact if it has any questions about the charity’s tax.
The charity must also provide details of two to four ‘responsible persons’ who are legally accountable for running the charity. A responsible person will be a person with legal responsibility for running the charity and could include trustees, directors (where the charity is a company) or other people in controlling positions in the charity such as the treasurer, company secretary, management committee members, and financial controller.
Over time, the authorised officials or responsible persons may change as people join and leave the charity and it’s important that any such changes are notified to HMRC so that claims and returns can continue to be validly made.
While the role of the person who is the authorised official may not have changed (for example, it’s always the director of finance), the identity of the person may have if there has been a change in personnel.
If responsible persons or authorised officials change HMRC should be notified as soon as possible using form ChV1.
Other changes that may need to be notified to HMRC include a change in the charity’s name or its bank account details. If the charity is a company, it should include a copy of the Certificate of Incorporation of Change of Name. If the charity is not a company, it should include the minutes of the meeting of the trustees at which the name change was adopted.
Charities must tell HMRC about any relevant changes at least one month before the new details are used to make a claim so that HMRC can update the charity’s records.
Fit and proper persons test
It’s a statutory requirement that a charity be able to prove that authorised officials and responsible persons are fit to run the charity. This involves a ‘fit and proper persons test’ that can be undertaken by the officials or persons concerned reviewing, and if satisfied they are able to do so, signing a fit and proper persons declaration. An individual is a ‘fit and proper person’ if they ensure, or are likely to ensure, that charity funds and tax reliefs are used only for charitable purposes.
The declaration includes confirmations that the individual has not been involved in tax avoidance or been disqualified from being a company director or a trustee of a charity. The declaration only needs to be sent to HMRC if it asks for it, but it must be retained by the charity while the person works for the charity and for four years after they leave. A help sheet and example declaration are available on HMRC’s website. Before signing the declaration, all authorised officials and responsible persons should read the Charities: fit and proper persons test guidance, which explains why charities need to make sure that their managers are suitable to hold such positions and, in particular, that they have not been involved in tax fraud or disqualified from being a charity trustee.
Recent change in HMRC guidance on signing of tax returns
HMRC has recently changed its published guidance on the signing of tax returns for charitable trusts. The new guidance says: “For charitable trusts completing trusts and estates tax returns, if an authorised official who is not a trustee of the charity completes and signs the charity’s tax return this must be countersigned by a trustee of the charity.”
HMRC has not included an explanation or additional guidance for the change, which may cause practical issues where trustees are not closely involved with the tax return, and sign-off procedures may need to change to accommodate HMRC’s new guidance.
How we can help
If you’d like any further information and specific guidance on the areas discussed, please get in touch with David Humphrys.
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Director, London
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