Keeping your Charity on the Right Track: Is Tax on Your Radar?
For month five of our Keeping your Charity on the Right Track month by month governance guide, we will be considering the direct and indirect tax implications of strategic plans.
Month 5 – Is Tax on Your Radar? Considering the Tax Implication of Strategic Plans
It is a common misconception that charities have a blanket exemption on tax, whether that be direct (corporate/income) or indirect (VAT) tax and therefore it is often not even considered until it is too late. However, failure to consider or even be aware of tax can be costly, in terms of missed opportunities, shortfalls in contribution or even fines and penalties.
In developing new opportunities and even in delivering the same services under different arrangements, tax needs to be on your radar. With a little forethought, however, some detailed discussion and sometimes a little professional advice, new and creative plans for development can often be structured in a way that furthers the charitable purposes and either minimises the impact of tax or at least factors in the impact of tax.
Checklist for Month 5:
- Review your activities – are they in furtherance of your charitable purposes and are they trading?
- Might there be a potential tax or VAT implication?
- Does this impact on whether the activity becomes viable?
- Can this be addressed by how we structure what we do?
- Should we seek professional advice?
Always think ahead – give yourself time to implement tax efficiently and properly.Read month 5
If you missed the previous four months, you can read them by clicking on one of the topics below:
- Month 1: Is your Board effective?
- Month 2: Reporting to the Board
- Month 3: SORP compliance
- Month 4: Charity Reserves
Keeping your Charity on the Right Track is put together along with our Charity & Not for Profit colleagues across our national association MHA. If you have any questions about tax or the guide in general, please get in touch with us on 01903 234094.