Details of the Schedule
Part 1 - Definition of “charity”, “charitable company” and “charitable trust”
2.Paragraph 1 sets out the broad conditions an organisation must meet if it is to be defined as a charity.
3.Sub-paragraph (1) requires a charity to be established for charitable purposes only and, in addition, to meet three further conditions: the jurisdiction condition (defined in paragraph 2 of the Schedule), the registration condition (defined in paragraph 3 of the Schedule)) and the management condition (defined in paragraph 4 of the Schedule)).
4.Sub-paragraph (2) defines a charity that is a body of persons as a charitable company and a charity that is a trust as a charitable trust.
5.Sub-paragraph (3) makes plain that the new definitions of “charity”, “charitable company” and “charitable trust” are subordinate to any definitions already in the statute. The effect of this provision is that the new definitions will not apply unless the previous definitions are expressly repealed.
6.Sub-paragraph (4) refers to section 2 of the Charities Act 2006 for the meaning of “charitable purpose”. The charitable purpose must fall within a list of descriptions of purposes set out in the 2006 Act and must also be for the public benefit. The reference to public benefit is to that term as understood for the purposes of the law relating to charities in England and Wales.
7.Sub-paragraph (4)(a) makes it plain that charitable tax reliefs and exemptions are available to organisations only if they meet the definition of charitable purposes as defined in section 2 of the Charities Act 2006, wherever the organisation is established.
8.Sub-paragraph (4)(b) makes plain that in the context of tax the definition of “charitable purposes” applies also for the purposes of the law of Scotland and of Northern Ireland.
9.Paragraph 2 sets out the details of the jurisdiction condition (paragraph 1(1)(b)). Under sub-paragraph (1), in order to meet the jurisdiction condition a body of persons or trust must be subject to the control of a relevant court in the UK with respect to charities or a corresponding jurisdiction outside the UK in the EU or a specified relevant territory.
10.Sub-paragraph (2) defines what is meant by a “relevant court in the UK”. The courts are the High Court in England and Wales, the Court of Session in Scotland and the High Court in Northern Ireland.
11.Sub-paragraph (3) defines a “relevant territory” as being a member State of the EU other than the UK or a territory specified in regulations made by the Commissioners for HMRC.
12.Sub-paragraphs (4) and (5) provide that regulations specifying a relevant territory are to be made by statutory instrument. Such regulations will be subject to the negative resolution procedure.
13.Paragraph 3 sets out the details of the registration condition (paragraph 1(1)(c)). Sub-paragraph (1) introduces two conditions, condition A and condition B which a body of persons or trust must meet in order to meet the registration condition. Condition A applies to organisations in England and Wales, and condition B applies to organisations outside England and Wales.
14.Sub-paragraph (2) sets out the details of condition A. If the charity is required to be registered under the Charities Act 1993 then it must be so registered.
15.Sub-paragraph (3) sets out the details of condition B. Where the law of the territory requires a charity to be registered in a register corresponding to the register of charities held by the Charity Commission in England and Wales then the charity must be registered in order to meet the registration condition.
16.Paragraph 4 sets out the details of the management condition (paragraph 1(1)(d)). Sub-paragraph (1) requires managers of a body of persons or trust to be “fit and proper” persons in order to meet the management condition. “Fit and proper” is not defined in the legislation so takes its natural meaning. HMRC will issue guidance on how it will apply this test. Sub-paragraph (2) defines a “manager” as a person having general control and management of the administration of the body or trust.
17.Paragraph 5 introduces a relaxation to paragraph 4 such that, depending on the circumstances, the Commissioners for HMRC may treat a charity as having met the management condition throughout the period of appointment of a manager who is not “fit and proper”.
18.There are two circumstances where the relaxation under paragraph 5 may apply:
where the manager is not in a position to prejudice the charity’s delivery of its charitable objects then sub-paragraph (2)(a) may apply and the charity may be treated as meeting the management condition; or
where, taking account of all the circumstances, it is just and reasonable for the charity to be treated as meeting the management condition then sub-paragraph (2)(b) may apply.
19.Paragraph 6 allows HMRC to publish a list of the names and addresses of organisations who have claimed, and appear to be, or to have at some time been, eligible for, charitable tax reliefs.
20.Paragraph 7 applies the new definition of a charity in Part 1 of the Schedule to income tax, capital gains tax, corporation tax, value added tax, inheritance tax, stamp duty, stamp duty land tax and stamp duty reserve tax.
Part 2 - Repeals of superseded definitions and other consequential amendments
21.Paragraphs 8-28 repeal the definitions of a charity, charitable company and charitable trust in various Acts. These will be superseded by the new definitions of “charity”, “charitable company” and “charitable trust” in Part 1 of the Schedule and makes a number of further consequential amendments.
22.Paragraph 29 provides for the Commissioners for HMRC to make amendments, by order, to enactments relating to income tax, capital gains tax, corporation tax, value added tax, inheritance tax, stamp duty, stamp duty land tax and stamp duty reserve tax to align those statutes with the new definitions of “charity”, “charitable company” and “charitable trust” in Part 1 of the Schedule. Such orders will be subject to the negative resolution procedure.
Part 3 - Meaning of “community amateur sports club”
23.Part 3 of the Schedule broadly applies the location and management conditions in Part 1 of the Schedule to community amateur sports clubs (CASCs). CASCs are eligible to some, but not all, charitable tax reliefs.
24.Paragraph 31 amends section 658(1) of the Corporation Tax Act 2010 (CTA) to require a CASC to meet the location condition and the management condition.
25.Paragraph 32 introduces three new sections into CTA: section 661A (the location condition); section 661B (the management condition); and section 661C (periods over which management condition is to be met).
26.New section 661A sets the location condition for CASCs. Subsection (1) provides that a CASC will meet the location condition if the club is established in a member State of the EU or in a relevant territory (subsection (1)(a)), and the facilities it provides for eligible sports are all located in a single member State of the EU or relevant territory (subsection (1)(b)). Subsection 2 defines a relevant territory as being one specified under paragraph 2(3)(b) of this Schedule (see paragraph 11 above).
27.New section 661B sets the management condition for CASCs. It is the same as that for charities, suitably amended as set out in paragraph 4 of this Schedule (see paragraph 16 above).
28.New section 661C sets out the circumstances for CASCs when the management condition is treated as being satisfied even where a manager of the CASC is not or was not a “fit and proper person”. Subsections (1) and (2) follow the same form as for charities in paragraph 5 of this Schedule (see paragraphs 17 and 18 above). The same comments on the application of this section to CASCs apply as for charities.
Part 4 - Commencement
29.Paragraph 33 provides for the commencement of Part 1 of this Schedule. Under sub-paragraph (1), Part 1 is treated as coming into force on 6 April 2010. However, under sub-paragraph (2), the new definitions in Part 1 will not apply to a provision until the provision it replaces, set out in Part 2 of the Schedule, is repealed.
30.Paragraph 34 sets out the provisions for repealing the current definitions of a charity, charitable company and charitable trust.
31.Sub-paragraph (1)(a) repeals the current definition of a charity as it applies to Gift Aid donations made by individuals for the purposes of Chapter 2 Part 8 of ITA for gifts made on or after 6 April 2010.
32.Sub-paragraph (1)(b) and sub-paragraph (2) provides HM Treasury with the power to apply the new definitions in Part 1 of the Schedule to the provisions in Part 2 by order.
33.Sub-paragraphs (3) and (4) set out the conditions for the order making powers in sub-paragraph (1)(b) and sub-paragraph (2).
34.Paragraph 35 provides for the provisions in Part 3 of this Schedule (CASCs) to be treated as applying from 6 April 2010