What is a charity?

The Charities Act 2011 (CA 2011) introduced a new set of criteria for charities to comply with, which meant that they have a wider set of purposes which they can fit into but they have to satisfy a number of additional criteria and stringent monitoring to be registered and remain so.

Essentials of a charity

Not all institutions that adopt a charitable purpose will be registered with the Charity Commission. This is because registration is not a prerequisite of being a charity. CA 2011 defines a charity as an institution that is established for charitable purposes. In consequence any organisation wishing to be considered as a charity must be able to satisfy this definition.

In particular it must be an institution but CA 2011 does not offer a definition of this so earlier legislation has to be resorted to for help. The situation is confused by the legislation stating that some organisations are charitable if other legislation indicates so. This can then lead to a difficulty of external control that the practitioner needs to be aware of.

Charities do have the advantage that they

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All in? Court confirms when a settlement is 'made' for the purposes of excluded property (Accuro Trust (Switzerland) SA v The Commissioners for HMRC)

Private Client analysis: This case considered the meaning of 'relevant property' under the settlements regime of the Inheritance Tax Act 1984 (IHTA 1984) and, in particular, the time at which this definition is to be tested. The question arose as to whether the trustees of an offshore trust established by a non-UK domiciled settlor were subject to the UK settlements regime in respect of property added to the trust after the settlor became deemed domiciled in the UK, or whether they were exempt from such charges as the trust consisted solely of excluded property. The First-tier Tribunal (FTT) held that whether trust property is excluded property is based on the status of the trust at the time that it was established, not at the time that the property in question was added to the settlement. As a result, the trust in this case did consist solely of excluded property and no inheritance tax (IHT) charges arose as a result of either the ten-year anniversary or capital distributions. The FTT was also asked to consider whether their jurisdiction was appellate, or supervisory only. The FTT held that, while their jurisdiction was supervisory, the questions raised by the trustees were relevant in establishing whether HMRC had acted reasonably and that the outcome (ie that the paid IHT should be refunded and that no further IHT was due) would be the same in either case. Written by Katherine Willmott, senior associate solicitor at Foot Anstey LLP.

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