Charity Tax Fraud May Cost Up to £ 100 Million
: Tax fraud involving charities has been estimated to cost tens of millions of pounds; it has been claimed by the Third Sector magazine.
Whitehall discussions have mentioned figures ranging from £60 million to £100 million in tax fraud charities have been involved in.
Whitehall discussions were being conducted to understand the effects the anti-fraud legislation was having on the UK economy sector.
Fraud is being thought to be at the centre of the Gift Aid, one of the biggest successes of charities in the country. Money generated by the Gift Aid totaled to just over £1 billionn last year.
Charities are constantly coming into the glare of media scrutiny as news hits of many organizations involved in tax fraud.
Fear of fraud was the reason behind the introduction of the ‘fit and proper persons’ test by the government. HM Revenue & Customs has now being given the power to cancel or relinquish tax relief to a charitable organization if it has reasons to believe that a senior manager or a trustee is not trustworthy.
Instances are not rare when senior management and the board of charitable organizations has come under scrutiny for using tax relief for managing their own personal finances.
The ‘fit and proper persons’ test was introduced along with a new legislation that will allow EU charities to claim tax relief on the donations made by UK taxpayers. The fear was that unscrupulous persons could claim Gift Aid on donations to non-existent charities.
HMRC has said in a brief that if tax relief were extended without the new test the country may lose an additional £450 million a year in fraud. HMRC also said that even with the test in place, it expects tax fraud in Europe to be £150 million a year till 2019.