Will the new “Common Reporting Standard” reporting requirements affect your charity?
Common Reporting Standard (CRS) reporting requirements are now in place and charities need to consider whether or not they are required to report to HMRC under this new standard.
What is the Common Reporting Standard?
The CRS rules require financial institutions, including relevant charities, to carry out due diligence and report on grant recipients under the Automatic Exchange of Information (AEOI) regime.
The CRS rules were introduced on 1 January 2016 and the first reports, covering the calendar year ending 31 December 2016 must be filed with HMRC by 31 May 2017.
Who will need to report to HMRC
There are two main categories for reporting under these new rules – charities will either be classified as a ‘Financial Institution’ (FI) or a ‘Non-Financial Entity’ (NFE).
A charity will be classified as an FI if:
- At least 50% of the charity’s gross income is derived from investing, reinvesting or trading in financial assets; and
- Those financial assets are wholly or partly professionally managed by another FI (such as a fund manager or wealth manager); and
- The entity qualifies under the two factors above for at least three years or for the period that it has been in existence.
Only charities that are classified as FIs will need to report to HMRC.
Therefore if the majority of your charity’s income is from gifts, grants, legacies and donations then you are unlikely to be affected and will be classified as a NFE.
We will be contacting all of our charity clients who we consider will be subject to this new reporting requirement during January 2017. If you feel that your charity may be affected and don’t hear from us please do get in touch. The team can be contacted on 01743 273273 or by email at email@example.com