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HMRC have recently provided updated guidance on the new Common Reporting Standard, and how it applies to charities. This is a new and complex piece of legislation brought into UK law via a treaty with the USA. Its purpose is to ensure global tax transparency and prevent tax evasion.  It came into effect on 1st January 2016 and the first reports are needed by 31st May 2017 under threat of penalties.

Who is affected?

Most charities will not be affected.

However, if your charity will answer YES to all of the following questions then a report may be required:

1. Are more than half your incoming resources from investments or financial assets (bank interest, rents from direct property holdings, and gift aided payments from most trading subsidiaries are not classed as investments – but gains on investments probably are)?

2. Is all or part of those investments managed by a financial institution on a discretionary basis?

3. Has this been the case for the last 3 years (or since creation if the charity is not 3 years old)?

The charities most likely to be affected are those with endowments or significant, invested reserves – BUT there is no minimum level.


What needs to be reported?

Where a report is required the information needed for individuals and entities will be as follows:

- Name

- Address

- Date of birth

- Taxpayer identification number

- The country where the taxpayer is based

- And some financial figures and account numbers

As we are part way through the year HMRC are, reportedly, taking a moderate approach to situations where full information has not been collected to date.


Which individuals or entities will be reported?

The exact information required will depend upon the structure of your charity – with slightly different rules applying to Charitable Trusts and Unincorporated Charities and CIO’s and Charitable Companies.

For trusts, this would include settlors, mandatory beneficiaries (e.g. where the settlor requires allocation in a specific way, discretionary beneficiaries (e.g. grant recipients) and any lender to the charity (even where, for example, it is a trustee lending interest free).

For corporates, the report is needed in respect of any shareholders, lenders, or anyone with an interest in the profits of the charity.


What next?

If you believe you are affected, then it is necessary to make your first annual report (y/e 31.12.16) by 31st May 2017 (with a £300 penalty for late submission and up to £3000 for inaccurate forms).

This can only be done via an online facility and you must register your charity with HMRC via


Of course, Thomas Westcott would be happy to help you at all stages of this process. Either contact your usual Thomas Westcott Charity Advisor or Stuart Carrington on 01297 33388,

Stuart is a partner of Thomas Westcott and a member of our Charities Team. He has a keen interest in all aspects of charity activities and speaks regularly of ethical and governance issues.