Procedure: newly created charities
Newly created charities are where the purported charity is set up by
- Will (IHTM12041)
- a qualifying Instrument of Variation (IHTM35011)
- Settlement (IHTM16000)
- other disposition
These situations, along with family/private charitable trusts, represent an area of potential risk of tax avoidance.
If a transfer of value to a new charity has been treated as exempt under IHTA84/S23, the Risk Assessors will decide whether to accept or check the claim, based on the information already received and the tax at stake. If the Risk Assessors decide the deduction should be checked you should contact the taxpayer or agent to find out how they intend to establish the charitable (IHTM11112) status.
If they have written to the Charity Commissioners or equivalent body in the EU or other specified country, you should ask them to tell us of the decision, when made, and to send us a copy of the Charity Commissioners Index Report (or equivalent) if charitable status is granted. Once this is received you can accept the exemption.
If they do not intend to approach the Charity Commission or equivalent body, you should ask the taxpayer or agent whether they intend to approach HMRC Charities to apply for approval for charitable tax exemption. If this is the case ask them to send us a copy of the HMRC Charities letter confirming approval.
You should not close the file until confirmation from the Charity Commission (or equivalent) or HMRC Charities has been received. If you do not receive confirmation within 6 months you should refer the file to Technical.
If the taxpayer or agent does not intend to apply to the Charity Commission (or equivalent) or HMRC Charities, you should refuse the exemption. Any objection to this refusal should be referred to Technical.