The Revenue being uncharitable

Published on 21 September 2004

There are over a million trustees of charities in the United Kingdom and many have one thing in common. No, not that they are selfless individuals giving of their time to help others. It is that they may be expected by the Revenue to complete a Self Assessment Return. It is not only charity trustees that find themselves in this position; it can, for example, also be directors of companies formed by tenants to buy out freeholds; or some school governors; or the sports club management committee.

In all these cases the possibility of any trustee/director having anything of a taxable nature deriving from their activities is very unlikely. Yet the Revenue insist that all directorships must be disclosed on a Self Assessment form and if such a Return has not been received the trustee/director should apply to the Revenue to receive one.

Many people on low incomes, encouraged by Gordon Brown's vision of citizenship, give of their time and energies and find that they are asked to be a trustee of a local charity or not-for-profit organisation. When they accept they do not realise that very often the body will be structured as a company limited by guarantee. All trustees are directors in this situation, but typically they will just call themselves trustees.

LITRG has asked the Revenue to exempt such people from the onerous task of completing Self Assessment Returns, where the only reason is due to their charitable or not-for-profit directorship. The current response seems to be that it is 'all too difficult at the moment'.

The Paymaster General has made great play about taking people out of Self Assessment and enabling people to use the new short tax return. But be the wrong sort of trustee or serve on a not-for-profit Board and you might have to complete a Self Assessment return for the first time or be told you are not allowed to use the new short tax return.

We searched on the Revenue's website and in Revenue guidance material on Self Assessment, but we found no helpful information that advises the million trustees of their responsibilities.

The tax return notes merely say that directors with no income should tick the Employment Section on page 2 of the Return and then explain in the additional information page as to why they didn't complete the employment pages.

This lack of comprehensive guidance has turned thousands of trustees into unknowing tax defaulters and this, in itself, is very unsatisfactory.

Surely the time is now right to remove the unremunerated charity (or not-for-profit) trustee from the Self Assessment net? If in rare cases, they are remunerated, then by all means have a return issued (where the organisation would in any event have to operate PAYE etc.).

It will not help voluntary sector recruitment, a key government initiative, if the Revenue makes volunteers complete full Self Assessment Returns or bars them from using the new, simpler, short form Return.

(21-09-2004)

Contact Name: John Andrews (Tel: 0844 579 6700, Fax: 0844 579 6701)