Firstly, I need to clarify a point made in one of my posts last week. I made reference to my view that, given that the reliefs for charitable donations applied only to UK charities, the government should address the question of alleged ‘bogus charities’ by reference to the specific charities concerned and not by the blanket restriction on charitable tax reliefs proposed in the Budget.

In fact, from 1 April 2012, in compliance with our obligations under the European Treaty, charitable tax reliefs have been extended to charities based in other EU countries, plus Norway and Iceland. There are three requirements for such charities (and indeed for UK charities), as follows:

1. The jurisdiction requirement – they must be resident in one of the above territories.

2. The registration requirement – they must be registered as a charity in the relevant territory.

3. The management condition – they must be managed by ‘fit and proper persons’.

Apart from the fact that number 3 sounds worryingly like the alleged test that the football authorities apply to those seeking to acquire control of football clubs, which appears to exclude virtually no-one, this does not appear to be a recipe for the proliferation of bogus charities.

The very fact that a country has been admitted to the EU suggests that its legal infrastructure is up to scratch, and it would be more than a little arrogant of us to argue that charities registered in other EU countries are somehow less genuine than out very own. And of course there are procedures for the government to raise concerns with their counterparts in other EU countries where appropriate.

Indeed George Osborne has been quoted as saying that he has concerns about 100 charities. In the UK alone I believe there are almost 200,000 charities, so we appear to be talking about 0.05% of the charities regulated by the Charity Commission. Had the government not starved the Charity Commission of resources to do its job properly, the excellent people who run that worthy organisation could no doubt have resolved Mr Osborne’s concerns within a very short period by an appropriate round of inspections; indeed, so small is the number of charities concerned that I suspect this could be done even with the Commission’s limited resources.

It would appear that Mr Osborne has realised that he has bitten off considerably more than he can chew here. In a scenario grimly reminiscent of Alastair Darling’s climb down over the abolition of the 10% income tax band, not to mention entrepreneur’s relief, he has announced a consultation on tax relief on charitable giving, which I suspect will lead to some relaxation of the proposed cap in this specific respect.

I have heard suggestions that for charitable giving the relief may be increased to 50% of income as opposed to 25%, although oddly enough that would not solve the problems of my client who would be adversely affected by this proposal, who in fact gives away shares to the value of substantially more than half of annual income each year.

That would clearly be an improvement, but I still don’t like the signals that it sends, which are so contrary to the Government’s rhetoric about the Big Society (which we can only assume to be rhetoric in the light of this particular political shambles). I still do not see that any restriction on tax relief for charitable giving is necessary; if there are problems with bogus charities root out those charities; after all the Chancellor seems to know which they are.

And so to the closing comment. In order to obtain tax relief on any charitable donation, whether of cash, shares or land, even a donor paying income tax at 50% has to give away cash or assets to the value of twice the available tax relief. I think it is scandalous that people who are prepared to be so generous with their wealth are pilloried by the government for that generosity, with the implication that they are somehow engaged in an illegitimate activity.

Even the beloved Paddy Ashdown, of blessed political memory, fell into the trap of commenting on this subject, apparently failing to maintain the balance he himself advocates. Apart from opening up what I suspect might be an il-advised question for a politician (Do you trust politicians to spend your money wisely? Discuss), I think he also hints at one of the real concerns underlying political thought on this issue.

The ability to raise and dispense large sums of tax revenue is the key to political power in this country, and it is intriguing to see the concern among politicians when even the slightest implication arises that the public might take that power into its own hands by making substantial charitable donations. One of the advantages Paddy Ashdown has as an elder statesman is his ability to be less guarded in his comments than some of his colleagues, and I suspect that here he has revealed the truth of what really lies behind some of the political posturing on this issue.

So we will see what comes out of the consultation, but politicians run the real risk of appearing hypocritical, mean-spirited and indeed power-hungry, if they impose any restriction on charitable tax reliefs in the final analysis.