The Telegraph quoted HMRC on the charity issue over the weekend, saying:
A source at HM Revenue & Customs says: “It is perfectly legal [but] people are, effectively, using the mechanism of the tax system to make a contribution to a charity of their choice, while ignoring their responsibility to the state.
“People claim they want to do things out of the goodness of their own heart, but you cannot expect UK Plc to subsidise them. The claim that charities spend the money better than the state is absurd. The reason we have a welfare state is because charities cannot cope.”
Well said!
Time to doff my hat to the Revenue press office for a change.
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First of all, let me say that I have no strong views on this issue either way. The status quo is simply an example of the tax system being used to encourage people to spend their money on certain things rather than others – paying heavy duties if they buy cigarettes, for instance, but receiving tax relief if they donate to charity. If the government feels that it no longer wishes to encourage top-rate taxpayers to give to charity, then the logical step is indeed to restrict or remove tax relief.
However, I do find the anonymous HMRC source’s comments quite astonishingly cynical. People generous enough to donate to charity are not “ignoring their responsibility to the state”, nor are they attempting any form of tax avoidance: they are being entirely tax compliant, using reliefs in exactly the manner the government intended, and even factoring in tax relief at 50% are still significantly out-of-pocket for making the donation.
Certainly, if anyone is doing what is being alleged of Tony Blair (donating to charities from which they themselves benefit), then that is a different matter entirely. But before s/he castigates the wealthy for their “perfectly legal” generosity or equates such conduct with tax avoidance, I do think this particular pen-pusher should ask him/herself what s/he has done for charity recently – and indeed how significant a contribution s/he has made to the national exchequer compared to top-rate taxpayers.
isnt it quite unusual for HMRC to make a comment on a matter of tax policy ie to effectively disagree with a statutory relief granted by Parliament (regardless of whether you agree with the relief or not I mean)? is this a sign of HMRC getting tougher?
Good grief! I’d say the reason we have a welfare state is because we want to be sure a safety net is there by paying for its provision and not leaving it to altruistic chance. That said, we no longer have the safety net despite having paid for it, benefits haveing lately been declared to be conditional instead of entitlements and the NHS having been flogged off by the government to the goverment and its avaricious chums. We have the worst of many worlds now.
It occurs to me that it is interesting to view charitable giving the opposite way to how it is normally perceived.
We could view it as an individual agreeing that if the state donates money to a charity of that person’s choice then they will also make a donation.
Once you turn it upside down in this way the whole situation does look rather perverse because the wealthy individual is offering to give a pound if the state donates a pound to his or her favourite charity. Contrast this position to that of the average individual who offers to give four pounds for every pound the state donates to his or her favourite charity.
Interesting idea!
I suspect the source is anonymous and also unofficial – a convenient sound bite for a journalist.
If it is an official statement then HMRC are overreaching themselves by commenting on tax policy which is the domain of the democratically elected government. They need to stick to their role which is to collect tax in accordance with the law (which they do not make).
Just as you regard HMRC’s deal with Vodafone as overstepping the mark, so too is commentary by HMRC on tax policy overstepping the mark,
All tax is political
What an amazing comment!
Tax policy is the domain of the politician – the role of the tax collector is to collect in accordance with the law.
Workers at HMRC are not responsible for tax policy, they are there merely to enforce the will of parliament.
If you are suggesting that they should interpret tax legislation in a way they feel like (perhaps as you suggested last week in a manner that the ARC prefers) then we have civil servants acting in an arbitrary fashion which is contrary to the rule of law and the doctrine of seperation of powers.
Please do not be naive
HMRC writes most tax law
Of course it has an involvement in tax policy
And of course civil servants have to reflect the wilkl of their political masters – as this statement obviously does
Now stop being stupid