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Ian Gledhill
HMRC (Charities)
Gift Aid Repayment claims
2000/2001
• 25,100 Charities claimed £221.5 million
2004/2005
• 60,329 Charities claimed £651.1 million
2008/2009
• 75,000 + Charities claiming £990 million
Gift Aid Requirements
There are 4 main requirements for Gift Aid
• Donations (a sum of money) must be made to a
UK Charity or CASC.
• Donations must be from a UK taxpayer
(individual).
• Charity / CASC must hold a valid declaration.
• Charity / CASC must be able to show receipt of
donation.
Requirement 1 – UK Charity / CASC
• Charity usually registered with Charity
Commission (England & Wales).
• If not, may still be able to apply to HMRC.
• CASC’s must register with HMRC.
Requirement 2 – Individual UK Tax payer
• Individual must
• be a UK taxpayer, and
• have paid sufficient tax to cover the claim made
to HMRC (Charities)
Tax to cover example
Individual’s
donation
£1,000
Charity claims
£250
Donor’s tax
- minimum
£250
Reduction in the Basic
Rate of Income Tax
• From 6 April 2008 – the Basic Rate of Income
tax was reduced from 22% to 20%
• Tax claimed by charities on every £1 donation
was reduced from 28.2p to 25p
• Government will give 2% transitional relief for
3 years from 6 April 2008 to 5 April 2011.
That tax can be
• Basic rate (currently 20%)
• 20% rate (rate deducted by
Banks/Building Societies)
• 10% rate (non repayable tax
deducted from dividend
payments)
• Capital Gains Tax
Requirement 3 - Gift Aid
declaration
Declaration must contain
•
•
•
•
•
•
Name of charity
Name of donor
Donors home address
Description of payment(s)*
Declaration that payment(s) are Gift Aided
Note explaining that the individual must have paid
sufficient UK income or capital gains tax to cover the
claim
Gift Aid declaration
Declaration must contain
• Name of donor
• Ideally, we would like to see:- Mr John Smith
• We will however accept the following
combinations:-
• John Smith
J Smith
• We will not accept:• Mr Smith
Smith
Mr J Smith.
John
Gift Aid declaration
Declaration must contain
•
Donors residential address
Addresses on GADs
(i)
YES 
•
•
•
•
11, HD8 9QA or Dunroamin, HD8 9QA
11, Park Street, Goole, HD8 9QA
11, Park Street, Goole
11, Park Street, HD8 9QA
Addresses on GADs
(ii)
NO ×
• 11, HD8.
• Park Street, Goole, HD8 9QA
• 11 Park Street.
• c/o Yates Wine Bar, Park St, Goole
Retention of
Declarations
• Should be kept for a period of 6 years after
the last donation (being looked at as part of
the budget announcement)
• Must be available for inspection
• Can be retained as a scanned document
Requirement 4 - Audit trail
Audit trail from each Donor:
Through the Charity’s books &
records and then into the Charity’s Bank
account
Sample Records - Donor register
Name of Donor GA
Date
Declaration
Amount Type
Mark Toner

14/8/2000
£5
cash
Eve Powell

5/9/2000
£10
cheque banked 14/9
6/9/2000
£7.50
cash
cash book
15/9/2000
£4
cash
cash book
Mike Keller
Andrew Kayley

cash book
Sample records - Church envelope register
GA Dec Week 1 Week 2 Week 3
Stan James

Andrew Kayley

£2
£1
Lola Jones
Fred Smith
TOTALS =
£1
Week 51 Week 52 Total
£6
£1
£1
£40
£1
£10

£250
£1
£263
£16
£24
£250
£251
£250
£257
£250
£251
£5000
£5,080
Cheque payments
•
Name of payer to be
shown in Bank paying in
book
•
List separately if there
are a large number of
payments
Particular Situations
Other Fundraising Events
Things To Look Out For – HMRC Audit
Sponsorship Gift Aid
Charity: The HMRC Auditors Benevolent Fund
Name of Participant: Ian Gledhill
Event: The 2009 Barnsley Marathon
Full Name
Clive Webster
Harry Potts
Home Address
21, Worthing Drive,
Brighton BN4 1ZP
Amount
£1 per Pub
Total Please treat
as Gift Aid
£26

6, Nottingham Close, 50p per Pub £13
Derby D4 2YP
Bob Blackburn 14,
CH2 1PY
50p per Pub £13

* you must pay an amount of UK income tax and/or capital gains tax at least equal to the
tax that the charity reclaims for donation
Sponsorship (And Aggregated Claims)
Gift Aid claim –
simplified procedure
Participant
Date of Payment
Total Donation Received
Stan Smith
19/05/09
£50.00
Ian Gledhill
21/05/09
£39.00
Jane Brown
28/05/09
£72.00
R68(NGA)
Adventure Fundraising
in the UK
• Parachute Jump
• Abseil down a tall building
• “3 peaks in 24 hours”
• “Walk the Pennine Way”
• “Swansea to Dublin Bike Ride”
All have possible benefits for the
participant that affect Gift Aid
What is a benefit?
• any item or service
• provided by the charity or a third party
• to the donor or a person connected with the donor
• as a consequence of making the donation
Gift Aid benefit limits
[Section (5A) Finance Act 1990]
Amount of donation
Value of Benefits
£0 - £100
25% of the donation
£101 - £1,000
£25
£1,001 - £10,000
5% of the donation
Note; Maximum limit for a series of benefits
given to a donor is £500 per tax year (w.e.f
6/4/07)
Membership
Subscriptions
• Membership subscriptions are not Gifts
• Prior to 6 April 2000 paid under Deed of Covenant
• HMRC will accept Membership subs as gifts if;
1. The payment does no more than secure
membership of the Charity.
2. The payment does not secure a right to personal
use of any facilities or services provided by the
Charity.
Membership
Subscriptions
• Family Memberships can be Gift Aided - provided
the subscription includes membership for the
donor
• Paying other people’s membership cannot be Gift
Aided because although payment is to the
Charity - Gift is to made to the member whose
subscription has been paid.
• Periodic Newsletters, attending meetings and
visiting the work of the Charity - not benefits
Donations attracting
right of free admission
• Statutory relaxation in donor benefit rules to view
property preserved, maintained kept or created
by a charity
• Must be in pursuance of its charitable purposes
• The right of admission applies to the donor and
one or more members of family
Donations attracting
right of free admission
•
Donation must be at least 10% more than
the normal admission charge(s)
Or
•
Donation allows the right of admission for
a period of at least one year.
NOT Gifts
• The purchase of books, jumble sale items,
bedding plants, food, alcohol etc
• Admission to events e.g. concerts, recitals etc.
• Golfing fees, Day Trips, Transport etc.
• Fees to adopt / re-home an animal
• Raffles, lottery tickets & 200 Clubs
• Hire of own premises
How does HMRC
decide who to audit?
Risk Assessment process;
• Problems seen in claims submitted by charity
• Rapid rise in claims made by a charity
• No previous audit by HMRC of claims made
• Information from staff in HMRC about a charity
• Information from the public / in the press with
concerns about a charity’s Gift Aid claims
What records are
required by HMRC?
• Blank Gift Aid declaration form(s)
• Appeal leaflets, membership forms, appeal
leaflets
• The selected Gift Aid declarations & Sponsorship
forms (paper or scanned images)
Account records - ‘Audit trails’
• Banking records, Paying-in book, Bank
statements, donation envelopes etc.
What will the auditor
be looking for?
• A valid GAD is held for every donor on the claim
•
•
•
or in the sample selected
Donations comply with the legislation – are they
all Gifts?
That any benefits given to donors do not exceed
the statutory limits
Audit trails exist to confirm that the donor has
made the payments claimed on
Prevention is better
than cure
• HMRC can help in the auditing & testing of
•
•
•
•
new systems and procedures
HMRC can audit claims prior to repayment
Charities should carry out own assurance
checks on claims
HMRC can assist charities who identify a
problem with their claims
Explain Gift Aid to fund-raising staff,
Treasurers etc.
What happens when
the audit is finished?
• A summary meeting will be held and the results
•
•
•
of the HMRC review will be explained
Advice will be given to charity on what changes
to systems & procedures could be made
The potential financial consequences for the
charity will be explained
A letter confirming the findings of the audit will be
sent to appropriate charity official
Most Common Errors
• No declaration held by
charity
• No evidence of receipt
of donation
• Payment not received
from an Individual
• Payment not a Gift
Time Limits for
claiming Gift Aid
• A charity which is a Trust for tax purposes must
make any claim within 5 years of the 31 January
in the year following the end of the tax year to
which the claim relates.
• A charity which is a Company for tax purposes
must make any claim within 6 years from the end
of the accounting period to which the claim
relates.
Time Limits for
claiming Gift Aid From April
2010
• A charity which is a Trust for tax purposes must
make any claim within 4 years of the end of the
tax year to which the claim relates.
• A charity which is a Company for tax purposes
must make any claim within 4 years from the end
of the accounting period to which the claim
relates.
Further Advice
Telephone
08453 02 02 03
HMRC (Charities) Help Line
Gift Aid, Charity Tax returns, VAT
queries, Trading & Community
Amateur Sports Clubs (CASCs)
Website
www.hmrc.gov.uk
E-mail
[email protected]
Any Questions?
Ian Gledhill
HMRC (Charities)