AN ACCOUNTANT from York has revealed how his intervention has saved British charities from a £60m bill.
Former sheriff and Conservative city councillor Peter Brown said legislation passed by the previous Labour government had required all limited companies, including charities, to file tax returns with HMRC using an online filing language known as “iXBRL”, the York Press reported.
Brown said that for non-charities, this had been a relatively simple matter.
However, due to the complexity of charity accounts, no commercial software provider was willing to write the software for charities, and HMRC could not secure funding from the Treasury to develop software on their own website.
“This meant that there was no software solution available to any charity that could enable it to comply with the law,” said Brown, of Peter Brown and Co of Acomb, who specialise in charity accountancy.
“This would have required a bespoke code to be written by every charity every time it filed a tax return.”
He estimated that about 120,000 charities would have been affected, at an estimated average cost to the sector of £500 per charity and about £60 million per annum in total.
He said that for over a year, acting as a council member of the professional body, the Association of Charity Independent Examiners, he had been lobbying HMRC, MPs and the former and present Chancellors of the Exchequer for charities to be exempted from the legislation.
Now HMRC has announced charities will be exempt from the legislation, representing a “victory for common sense”.
Charities will still have to submit tax computations in iXBRL but this will be a simple process, assisted by a facility on HMRC’s web site and with no significant cost to the charity sector.
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