There are 180,000 registered charities of which 100,000 are quite small organisations with less than £10,000 annual income. The Government has announced details of its modernising of the status of prospective charities. The legal framework of Charities has hardly changed since its legal formation in 1601. The review recommends that charitable status should be based on the overriding principle of “public benefit”. They expect that organisations would then fall into one of ten new categories, including poverty, promotion of human rights, conflict resolution, culture, arts & heritage, education advancement, religion, health, amateur sports and environmental protection.

Charity status provides tax concessions worth millions of pounds a year but some charities like private clinics and independent schools will have to buck up their “public benefit” aspect if they are too retain their status. These “charities” often charge high fees making them well outside the average public grasp. Their way forward would possibly be to make medical equipment available to the NHS and for public schools to open their facilities like swimming pool, sports grounds and library to the public. Clearly, both the clinics and these schools should not be given charity status where they cater for the elite of society who can afford to pay.

The high street charity shops may well change, as one of the proposals is to remove the need for the large charities to set up a separate trading arm, the shop, for its fundraising. There will also be a new licensing system regulating street collections. One aspect of our own charity work that does not seem to feature in the review is the confusing grey area of VAT. We find most companies we deal with are completely unaware that certain of their goods have to be Zero-rated to relevant charities. Even when I produce the Inland Revenue booklet which spells out that they must, under law, zero rate the goods to us they point blankly refuse. They seem to regard the VAT money as their own company money. Their excuse is sometimes that they can’t make the computer take off the VAT! In any case its very confusing even for us as some goods like a digital cine camera has zero rate VAT when used for veterinary diagnosis/operations while a digital still camera has VAT unless its used for more than say 8 hours a day! Confused? Join the club!