Charity shops:
navigating tax and compliance
Guy Biggin, Partner at national audit, tax, advisory and risk firm, Crowe uk, looks at charity shops with regards to navigating tax and compliance
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At present charity shops benefit from a number of taxation exemptions and reliefs (including, for example, VAT relief on donated goods, the Retail Gift Aid Scheme and business rate relief (between 80-100%)). Charities need to ensure that current taxation opportunities are maximised, whilst navigating the requirements to ensure full compliance.
Taxation legislation is complex and changeable. The potential for future alterations to the VAT and rates reliefs offered to charities comes high on the list of sector wide concerns.
In recent years charity shops have seen decreasing volunteer numbers and increasing staff numbers. It is essential that the charities comply with the applicable employment taxation legislation. In particular charities must be careful to ensure that the line between volunteers and employees is never blurred.
Whilst charity shops are essential part of our high street and are significant providers of charity income, falling foul of taxation compliance requirements can be expensive. For example, the naming and shaming of charities who breach the National Minimum Wage legislation means that mistakes can also be brand damaging.
Taxation legislation is just part of the regulatory environment under which charity shops operate, other legislation, such as the rules around Health and Safety, must also be considered. To manage the compliance risk trustee boards need to ensure they are fully appraised of all the applicable legislation in relation to running charity shops.
Crowe UK is a national audit, tax, advisory and risk firm with global reach and local expertise. It specialises in non profits and have the expertise in all areas of accounting, audit and taxation compliance to help your charity successfully navigate current requirements.
If you would like to discuss any issues raised above in more detail please do not hesitate to contact Guy Biggin at guy.biggin@crowe.co.uk.