1. HMRC Charities Overview Specialist PT Charities, Savings & International Thursday 22 nd September 2016 Neil Paterson, Andy Berrington & Jay Johnson

2. Protective marking – Unclassified, Protect, Restricted (delete as required) HMRC NL Standard | 05/08/2013 | 2 Topics Gift Aid Overview Gift Aid Small donations Scheme (GASDS) How to apply for recognition as a charity for tax purposes Making a Repayment claim

3. Gift Aid Overview

4. Protective marking – Unclassified, Protect, Restricted (delete as required) | 4 What is Gift Aid? Donation from a UK Taxpayer£100 Charity can claim£25 Charities can claim 25p for every £1 donated

5. Protective marking – Unclassified, Protect, Restricted (delete as required) | 5 Gift Aid Requirements The 5 main requirements of Gift Aid are; Gift of a sum of money must be made to a Charity / CASC accepted by HMRC Donations must be from an individual who is a UK taxpayer Donor must make a valid Gift Aid declaration Charity / CASC must be able to show receipt of donation Payment must not have any conditions for repayment (to the donor)

6. Protective marking – Unclassified, Protect, Restricted (delete as required) | 6 About the Donor The Donor must be an Individual (not a Limited Company or PLC) who is; Resident in the UK, or Non-Resident in the UK - but must have paid sufficient UK tax Council Tax & VAT cannot be used to cover Gift Aid Residents of Isle of Man / Channel Islands / Republic of Ireland are Non Resident for UK tax purposes

7. Protective marking – Unclassified, Protect, Restricted (delete as required) Donor in 2016/17 Will have earned income of £11,000 Receives £1,000 in interest on cash savings (not including gross interest on ISA savings) Receives income of £5,000 from dividends on Stocks & Shares Sold an asset and made a ‘chargeable gain’ of £11,100 Total tax free income in 2016/17 = £28,100 Donor cannot make any Gift Aid donations in 2016/17 | 7

8. Protective marking – Unclassified, Protect, Restricted (delete as required) | 8 Gift Aid Declaration A Gift Aid Declaration must contain;Gift Aid Declaration Name of charity or CASC Name of donor Ideally, we would like to see; Mr John Smith We will accept; John Smith, J Smith, Mr J Smith We will not accept; Mr Smith, Smith, John Donor’s home address Description of payment(s) Declaration that payments(s) are Gift Aided Must include a declaration that confirms; Declaration “I am a UK taxpayer and understand that if I pay less Income Tax and/or Capital gains tax than the amount of Gift Aid claimed on all my donations in that tax year it is my responsibility to pay any difference.” | 8

9. Protective marking – Unclassified, Protect, Restricted (delete as required) | 9 Addresses on Gift Aid Declarations 11, WA8 4LY or Dunroamin, WA8 4LY 11, Park Street, Widnes, WA8 4LY 11, Park Street, WA8 4LY 11, WA8. × Park Street, Widnes, WA8 4LY × 11 Park Street. × c/o Wetherspoons, Park St, Widnes × YES NO ×

10. Protective marking – Unclassified, Protect, Restricted (delete as required) | 10 Sponsorship Gift Aid declaration form A Sponsorship Gift Aid declaration form must contain;Sponsorship Gift Aid declaration form Name of participant Name of event Sponsor’s Home Address Amount of donations collected Must also contain the following statement; Name of charity the event is in aid of Sponsor’s Full Name Gift Aid tick box Date that pledged donations were collected If I have ticked the box headed ‘Gift Aid? √’, I confirm that I am a UK Income or Capital Gains taxpayer. I have read this statement and want the charity or Community Amateur Sports Club (CASC) named above to reclaim tax on the donation detailed below, given on the date shown. I understand that if I pay less Income Tax / or Capital Gains tax in the current tax year than the amount of Gift Aid claimed on all of my donations it is my responsibility to pay any difference.

11. Protective marking – Unclassified, Protect, Restricted (delete as required) | 11 Joint Donations If a donation is drawn on a joint bank account and the charity has been given a Gift Aid declaration by one account-holder only, the charity can assume the donation is from the donor who has made a Gift Aid declaration - even if the cheque is signed by the other account holder. e.g. Donation received from Mr and Mrs Smith’s bank account. Charity hold a Gift Aid declaration for Mr Smith but not Mrs Smith Charity can assume that the donation has been made by Mr Smith If in doubt seek clarification from the donor e.g. a cheque drawn on the sole account of the other account-holder.

12. Protective marking – Unclassified, Protect, Restricted (delete as required) | 12 Most Common Errors No declaration held by charity Incomplete/incorrect Gift Aid declarations No evidence of receipt of donation Payment not received from an Individual – e.g. company donations Payment not a Gift

13. Protective marking – Unclassified, Protect, Restricted (delete as required) HMRC NL Standard | 05/08/2013 | 13 What records are required by HMRC? Blank Gift Aid declaration form(s) Any membership forms if applicable The selected Gift Aid declarations & Sponsorship forms (paper or scanned images) Account records - ‘Audit trails’; Banking records, Paying-in book, Bank statements, donation envelopes, any appeal leaflets etc. Records should be kept for a period of 6 years (after the last donation)

14. Protective marking – Unclassified, Protect, Restricted (delete as required) | 14 Audit trail It is important that you keep records that can show an Audit trail from each donor. Ideally, this should show how the donation goes; Through the charity’s books & records and then into the charity’s bank account. BANK

15. Protective marking – Unclassified, Protect, Restricted (delete as required) | 15 Charity Auction £40 £100 £60 Gift Aid Shirt valued at £40, sold for £100 so Gift Aid can be claimed on £60.

16. Protective marking – Unclassified, Protect, Restricted (delete as required) | 16 Charity Auction £250 W. R o o n e y Signed shirt sold for £250. No Gift Aid can be claimed as is does not have a recommended retail price

17. Protective marking – Unclassified, Protect, Restricted (delete as required) | 17 Charity Dinners – Gift Aid? The purchase of a ticket for Fund-raising Dinner / Charity Ball is not a Gift. If the ticket price is £100 (includes £50 donation to Charity) - this is not a Gift. If the ticket price is set at a certain amount - any donations above this amount could be a Gift* If there is no ticket price and a suggested donation of £50 is requested to cover costs - this could be a Gift* * Providing a Gift Aid declaration is held for the donor and the donor is not obliged to make a suggested donation.

18. Protective marking – Unclassified, Protect, Restricted (delete as required) | 18 What is a benefit? A benefit is any item/service provided by the charity or a third party to the donor/person connected with the donor as a consequence of making the donation e.g. Childcare and Music lessons When someone makes a donation, you might want to give the donor something in return (an item or service) to say thank you. This is known as a ‘benefit’ An acknowledgement of a gift, a newsletter about a charities activities or items with a nominal value are not benefits We have to apply the benefit rules as there are limitations on what a donor can receive. For further information, please refer to Chapter 3.18 of our guidance at www.gov.uk

19. Protective marking – Unclassified, Protect, Restricted (delete as required) | 19 Gift Aid donor benefit limits You can claim Gift Aid on the donation if the value of the benefit doesn’t exceed certain limits, for example: From 6 April 2011; The maximum limit for a series of benefits given to a donor was increased to £2,500 per tax year (previously £500 per tax year)

20. Protective marking – Unclassified, Protect, Restricted (delete as required) | 20 Not Gifts You can’t claim Gift Aid on; 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

21. Protective marking – Unclassified, Protect, Restricted (delete as required) Sale of donated goods & Gift Aid Since April 2013 Donors can make a one-off GAD that covers donations worth up to £100 or £1,000 of future sale proceeds Charities write to a donor when sale proceeds exceed these amounts £100 limit in shops operated directly by a charity £1,000 in shops operated by a trading subsidiary company of a charity | 21

22. Protective marking – Unclassified, Protect, Restricted (delete as required) Sale of donated goods & Gift Aid The 3 ways that charity shops can convert donated goods into Gift Aid payments are; 1.Standard Method – Charity writes to donor when goods are sold & allows 21 days for donor to say they want some/all of the sale proceeds 2.Method A – letter is issued when proceeds from donated goods exceeds £100 in a tax year* 3.Method B - letter is issued when proceeds from donated goods exceeds £1,000 in a tax year* * Donor must be sent a letter by 31 May showing the total amount raised from the sale of their goods during tax year 2015/16 and the Gift Aid that will be claimed by the charity. | 22

23. Protective marking – Unclassified, Protect, Restricted (delete as required) | 23 Time Limits for claiming Gift Aid 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. 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.

24. Protective marking – Unclassified, Protect, Restricted (delete as required) New Building Appeal Make a donation to our Building Appeal Make a donation; £25 will pay for 30 bricks, £50 will pay for 10 bags of cement & £250 will pay for a new radiator Buy a brick for £5, or buy 12 bricks for £50 Buy a brick for £25 and we’ll inscribe your message on it Give £10,000 and we will name a room after you Donate £100,000 & we will name the building after you   Target to raise £250,000 | 24

25. Any Gift Aid Questions? | 25

26. Gift Aid Small Donations Scheme (GASDS) | 26

27. Protective marking – Unclassified, Protect, Restricted (delete as required) HMRC NL Standard | 05/08/2013 | 27 Small Charitable Donations Act 2012 (Gift Aid Small Donations Scheme) From 6 April 2013; Charities & CASCs that receive small cash donations of £20 or less will be able to apply for a Gift Aid style repayment without the need to obtain Gift Aid declarations for those donations GASDS is a public spending initiative (not a repayment of tax) that gives Charities & CASCs a top-up payment on donations they receive The total amount of small donations was capped at £5,000 maximum per tax year, giving a top-up repayment of £1,250. This increased to £8,000 maximum per tax year for GASDS collected from 6 April 2016 and the top-up repayment will increase to £2,000 You only have 2 years to claim GASDS for a tax year before they become out of date.

28. Protective marking – Unclassified, Protect, Restricted (delete as required) HMRC NL Standard | 05/08/2013 | 28 What is a small donation? A cash donation of £20 or less from an individual Donations must be collected and banked in the UK Membership Fees not covered by a Gift Aid Declaration are not small donations under this scheme Cash donations from Companies or Trusts cannot be GASDS No benefits can be given to an individual that makes a small donation

29. Protective marking – Unclassified, Protect, Restricted (delete as required) HMRC NL Standard | 05/08/2013 | 29 Eligibility for claiming GASDS The charity must have been in existence with HMRC for at least 2 full tax years before the year of claim Must have made successful GA claims in 2 of the previous 4 tax years without a gap in claims of 2 or more years Charity has not incurred an HMRC penalty in respect of GA or GASDS claims in the previous 2 tax years GASDS must be claimed within 2 years from the end of the tax year to which the claim relates Why do we have an eligibility criteria? - A good Gift Aid record assures HMRC that charity has appropriate internal processes in place to operate GASDS correctly.

30. Protective marking – Unclassified, Protect, Restricted (delete as required) GASDS examples Scenario 1 Charity submit their Gift Aid claim on 10 April 2015 (classed as the 2015/16 tax year) Charity submit their next claim on 11 April 2016 (this claim counts as 2016/17 tax year) Therefore the charity have submitted 2 claims, in the last 4 tax years, without a gap of 2 or more years between claims. Charity are now eligible to claim on GASDS received on or after 6 April 2017 (but not before this date). HMRC NL Standard | 05/08/2013 | 30

31. Protective marking – Unclassified, Protect, Restricted (delete as required) GASDS examples Scenario 2 Charity submit their Gift Aid claim on 5 May 2013 (classed as the 2013/14 tax year) Charity submit their next claim on 11 April 2016 (this claim counts as 2016/17 tax year) Although the charity have submitted 2 claims, in the last 4 tax years, there is a gap of more than 2 years between claims. Charity therefore do not meet the eligibility criteria to claim on GASDS as they haven’t submitted 2 claims within the last 4 years with a gap of 2 or less years between claims. A further claim would need to be made in the 2017/18 tax year to become eligible for GASDS received on or after 6 April 2018. HMRC NL Standard | 05/08/2013 | 31

32. Protective marking – Unclassified, Protect, Restricted (delete as required) Community Buildings Must be 10 beneficiaries or more present at a ‘Service’ for the small cash donations collected to be eligible (the 10 people do not include employees e.g. the Pastor, Priest, Vicar) Donations not eligible for GASDS are: Cash collected during a ‘Service’ when 9 or less people attended Cash given in Collection boxes, wall safes or for lighting a candle by visitors when services are not being held Cash donations handed to a Priest, Pastor, Vicar, Church Wardens etc. whilst visiting beneficiaries in their homes Save the World Charity | 32

33. Protective marking – Unclassified, Protect, Restricted (delete as required) Community Buildings Examples of a Community Buildings are: This does not include buildings used wholly or mainly for commercial or residential purposes, such as: A village hall A town hall A church A School A cathedral A synagogue A mosque etc. Priest’s House Vicarage / Manse A Supermarket Charity Shops Residential care homes | 33

34. Any questions on GASDS? | 34

35. Apply for recognition as a charity for tax purposes | 35

36. Protective marking – Unclassified, Protect, Restricted (delete as required) | 36 What you need to register as a Charity with HMRC Officials details; You need to have a minimum of 3 different trustees 1x Authorised Official 2x Other Officials (names, addresses, phone numbers, dates of birth, national insurance numbers) Charitable evidence; Governing document Rules/Constitution, Trust deed, Memorandum and articles of association, Will, Act of Parliament, Other

37. Protective marking – Unclassified, Protect, Restricted (delete as required) | 37 What you need to register as a Charity with HMRC Regulator details; Copy of notification of registration from any regulators Charitable objectives; What your organisation does Financial accounts; Last 3 months Provide accounting period end date Bank account details; Account name, number and sort code

38. Protective marking – Unclassified, Protect, Restricted (delete as required) | 38 Does your charity need to register with a Charity Regulator? If your Charities income exceeds £5000 you must register with the Charity Commission (England & Wales),Charity Commission All charities in Scotland & NI MUST register with their regulator Office of the Scottish Charity Regulator (OSCR) or the CCNI before registering with HMRC.Office of the Scottish Charity Regulator CCNI If not, may still be able to apply to HMRC to be accepted as a charity “for tax purposes” CASC’s (Community Amateur Sports Clubs) must register with HMRC. Some Charities are exempt from registering with the charity commission e.g. Churches, Schools etc….

39. Protective marking – Unclassified, Protect, Restricted (delete as required) | 39 Register with HMRC Online – WWW.GOV.UK BANK Search for – Charity Recognition

40. Protective marking – Unclassified, Protect, Restricted (delete as required) | 40 Register with HMRC Online – WWW.GOV.UK BANK When you’re ready click on “Start now”.

41. Protective marking – Unclassified, Protect, Restricted (delete as required) | 41 Charity Variation form (ChV1)ChV1 Introduced in July 2010 and must be completed and sent to HMRC 30 days before a claim if; Name & address has changed Authorised official and/or the Responsible person(s) has changed Bank account has changed The Charity’s Trustees or Directors have changed Charity has appointed a new nominee WWW.GOV.UK – Search for ChV1WWW.GOV.UK

42. Any questions on registrations? | 42

43. Making a Repayment Claim | 43

44. Protective marking – Unclassified, Protect, Restricted (delete as required) | 44 Charity Repayment Claim Options HMRC Charities HMRC Data Processing Centre Option 2 Government Gateway Option 3 3 rd. Party Software (OOO’s of donors) Gift Aid, Other Income & Charity Small Donation scheme schedules Option 1 Paper Charity Claim form - ChR1 (2013) Extracted Claim information By post Charity Repayment Service (Up to 1,000 donors) On line From own Laptop or PC Claim data

45. Protective marking – Unclassified, Protect, Restricted (delete as required) HMRC NL Standard | 05/08/2013 | 45 Charity Repayment Claim Service Introduced in April 2013 Only charities registered with HMRC can use the Service Must first register with Government Gateway on line ID & Activation PIN posted to authorised official - Must activate within 28 days Then need to Register and activate online service Separate service for Agents that submit claims on behalf of charities

46. Protective marking – Unclassified, Protect, Restricted (delete as required) | 46 Get it right first time If any section isn't applicable leave it blank. Don't enter N/A or Nil. Don't include blank spaces or other characters at the start or end of boxes. Enter the house name or number and the postcode of all donors that live in the UK. For donors living abroad, enter their address and put X in the 'Postcode' column. Aggregated donations are donations under £20 from different people totalling less than £1000 per line. For sponsored events enter the participant's name and address, the date collected, and the total amount raised. Don't include any donations over £500 – these must be shown separately as normal Gift Aid donations.

47. Any questions on the Making A Claim? | 47

48. Thank you Website: WWW.GOV.UKWWW.GOV.UK Helpline: 0300 123 1073 E-mail: repaymentqueries.charities@hmrc.gsi.gov.uk | 48