Taxation: Avoidance

Debate between Baroness Gardner of Parkes and Lord Deighton

Wednesday 6th February 2013 Lords Chamber

[Baroness Gardner of Parkes]

To ask Her Majesty’s Government what proposals they have to deal with any abuse of charitable status for the purposes of tax avoidance.

[The Commercial Secretary to the Treasury (Lord Deighton)]

My Lords, an organisation must be a charity, under the law of England and Wales, and meet certain other conditions in order to qualify for UK charity tax reliefs. Whether an organisation established in England or Wales is a charity in law is a matter for the Charity Commission. The Government are considering the proposals of the noble Lord, Lord Hodgson, on updating charity law following his review of the Charities Act 2006.

[Baroness Gardner of Parkes]

I thank the noble Lord for that Answer. I notice that when you complete your tax return, one section asks you to say whether you are a member of a tax avoidance scheme. I am always amazed by that. That makes me wonder whether certain tax avoidance schemes are recognised and approved by the Treasury. Can the noble Lord tell me whether the Cup Trust, which is the one that has been so widely accused in the recent press, is known and approved by the Treasury, or whether it is unknown and that it has come as a shock to the Treasury to have this revelation in the press?

[Lord Deighton]

My Lords, I cannot comment on the tax affairs of individual taxpayers but what I can do is speak generally. Schemes that abuse the gift aid rules with a view to enabling individuals to avoid tax do fall within the disclosure of tax avoidance schemes rules. That means that anyone who uses such a scheme must disclose it on their tax return. HMRC can then identify those individuals and challenge the reliefs claimed where appropriate.