Ian Gledhill HMRC (Charities)

Gift Aid Repayment claims 2000/ ,100 Charities claimed £221.5 million 2004/ ,329 Charities claimed £651.1 million 2008/ ,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 Declaration

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 SmithJ SmithMr J Smith. We will not accept:- Mr SmithSmithJohn Declaration

Gift Aid declaration Declaration must contain Donors residential address Declaration

Addresses on GADs(i) 11, HD8 9QA or Dunroamin, HD8 9QA 11, Park Street, Goole, HD8 9QA 11, Park Street, Goole 11, Park Street, HD8 9QA YES 

Addresses on GADs(ii) 11, HD8. Park Street, Goole, HD8 9QA 11 Park Street. c/o Yates Wine Bar, Park St, Goole NO ×

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: and then into the Charity’s Bank account Through the Charity’s books & records

Sample Records - Donor register Name of DonorGA Declaration Date AmountType Mark Toner  14/8/2000£5cash cash book Eve Powell  5/9/2000£10cheque banked 14/9 Mike Keller 6/9/2000£7.50cash cash book Andrew Kayley  15/9/2000£4cash cash book

Sample records - Church envelope register GA Dec Week 1 Week 2 Week 3Week 51Week 52Total Stan James  £2£6£40 Andrew Kayley  £1£1£1£1£1£16 Lola Jones £10£24 Fred Smith  £250£250£250£250£5000 TOTALS = £1£263£251£257£251£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 NameHome AddressAmount Total Please treat as Gift Aid Clive Webster21, Worthing Drive, Brighton BN4 1ZP £1 per Pub£26  Harry Potts6, Nottingham Close, Derby D4 2YP 50p per Pub£13 Bob Blackburn14, 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 ParticipantDate of Payment Total Donation Received Stan Smith19/05/09£50.00 Ian Gledhill21/05/09£39.00 Jane Brown28/05/09£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 donationValue of Benefits £0 - £10025% of the donation £101 - £1,000£25 £1,001 - £10,0005% 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 HMRC (Charities) Help Line Gift Aid, Charity Tax returns, VAT queries, Trading & Community Amateur Sports Clubs (CASCs)

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Ian Gledhill HMRC (Charities)