HMRC has confirmed that charities will be granted an exemption from new rules that will force businesses keep digital records of its accounts and produce quarterly updates.
In a consultation on its Making Tax Digital programme, HMRC did however say that while charities will be exempted, trading subsidiaries will need to adhere to the new rules.
In all, 91 responses were provided to the question of whether charities should be included in the proposals, which have been criticised over the suggested timeframe that will see new rules come into force in 2018.
In a statement the government said: “While the proposal to exempt those trading companies who distribute all profits to charity (and therefore had no corporation tax liability) had some merit, they could still have substantive VAT obligations.
“A significant reason for exempting charities is that many of them do not currently have to submit a tax return, and have a number of reliefs available to them for VAT purposes.”
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