Page 1, 11th April 1986

11th April 1986
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Page 1, 11th April 1986 — Dioceses fear large surcharge on covenants
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Locations: Hexham, Leeds, Newcastle

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Dioceses fear large surcharge on covenants

by Jack O'Sullivan

THREE of the four dioceses, whose covenant schemes are being investigated by the Inland Revenue, have been identified as Leeds, Northampton, and Hexham and Newcastle.

Collectively, they face possible surcharges from the Revenue running into hundreds of thousands of pounds. And there is no guarantee that other dioceses will not suffer the same fate.

The Revenue has revealed that the four were chosen for scrutiny simply because they responded most promptly to demands for financial records. There is no suggestion that their covenant schemes have been administered less efficiently than in other dioceses.

The Revenue tends to focus an investigation first on a few cases and then broaden it out. This means that other dioceses could . also be scrutinised and threatened with surcharges in the future. This could create a national repayment to the tax authorities topping a million pounds.

The Revenue's main suspicion is that some parishes have not been receiving all the income covenanted to them and upon which they have been reclaiming the basic rate of tax.

Fr Peter Wilson, assistant treasurer for Northampton, said this week, that his diocese could be asked to repay up to "several hundred thousand pounds" for claiming more tax than it was due.

Meanwhile, over the past ten days, parishes around the country have been implementing strict new accounting procedures governing covenanted donations. These are in accordance with new guidelines agreed with the Revenue. They mark the beginning of the new financial year.

In Southwark diocese, some covenanters have been given up to 70 numbered envelopes, which they have been asked to use for covenantable donations. These include weekly diocesan collections, special collections, Christmas and Easter offerings and other monies, such as Mass stipends, given regularly under covenant.

In a letter to covenanters, Southwark Financial Secretary, Canon Nicholas Rothon, explains that in future, "the Revenue requires that evidence of the receipt of the promised donations be recorded at parish level".

Under the new system of envelopes (money can also be given by cheque or bankers order) the identity of the donor will remain confidential. Only the parish priest will know the correspondence between donor and envelope number.

But it is not expected that the tax authorities are going to scrutinise thousands of individual envelopes.

Rather, it is understood, the new scheme will offer parish priests the opportunity to recognise where donations are not as high as promised. This will allow them to better assess the amount of tax which can rightfully be claimed back from the Revenue.




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