In these difficult times, many will have noted HMRC's increasingly aggressive approach to tax collection. With the benefit of significantly enhanced powers to help the regulator maximise the tax take, it is disheartening to note the HMRC's recent interest in NHS staff who may have in some way benefited from the support of NHS charities.

Charities should be aware that training or educational opportunities and even social events may give rise to a taxable benefit in the hands of the individual. Awards can soon lose their incentive value if the recipient later has to pay tax on the award. Care must therefore be taken, especially in relation to the charitable funds administered at a local level by a ward or department - often because this accords with the wishes of a donor - to ensure that staff do not accidentally incur a tax liability.

The rules in relation to benefits provided to individuals arising out of their employment are quite prescriptive. Strictly speaking any such benefit will be subject to tax and National Insurance contributions unless there is a specific exemption. For example, in relation to social events, each staff member will have a tax allowance of £150to cover not just the typical Christmas party but all social functions which may take place during the tax year. If the total benefit over the course of a year is over £150 per head, the full expenditure is taxable, not just the excess over the £150 allowance - in these circumstances, the employee would be liable for the tax.

One option for charities seeking to support the efforts of NHS staff or develop their skills would be to liaise with the employer to determine if the potential tax problem might best be managed by way of a PAYE settlement agreement with HMRC. This transfers the tax and NI liabilities to the employer, which the charity could then elect to settle. However, those arrangements whilst administratively straightforward can be expensive to implement and should not be entered into lightly.