Title: Ian Gledhill HMRC (Charities)
1Ian GledhillHMRC (Charities)
2Gift 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
3Gift 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.
4Requirement 1 UK Charity / CASC
- Charity usually registered with Charity
Commission (England Wales). - If not, may still be able to apply to HMRC.
- CASCs must register with HMRC.
5Requirement 2 Individual UK Tax payer
- Individual must
- be a UK taxpayer, and
- have paid sufficient tax to cover the claim made
to HMRC (Charities)
6Tax to cover example
Individuals donation
1,000
Charity claims
250
Donors tax - minimum
250
7Reduction 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.
8That 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
9Requirement 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
10Gift 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 Mr J Smith.
- We will not accept-
- Mr Smith Smith John
11Gift Aid declaration
- Declaration must contain
- Donors residential address
12Addresses 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
13Addresses on GADs (ii)
NO
-
- 11, HD8.
- Park Street, Goole, HD8 9QA
- 11 Park Street.
- c/o Yates Wine Bar, Park St, Goole
14Retention 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
15Requirement 4 - Audit trail
Audit trail from each Donor
Through the Charitys books records
and then into the Charitys Bank account
16Sample Records - Donor register
Mark Toner ? 14/8/2000 5 cash cash book
Eve Powell ? 5/9/2000 10 cheque banked 14/9
Mike Keller 6/9/2000 7.50 cash cash book
Andrew Kayley ? 15/9/2000 4 cash cash book
17Sample records - Church envelope register
18Cheque payments
- Name of payer to be shown in Bank paying in book
- List separately if there are a large number of
payments
19Particular SituationsOther Fundraising
EventsThings To Look Out For HMRC Audit
20Sponsorship Gift Aid
- Charity The HMRC Auditors Benevolent Fund Name
of Participant Ian Gledhill - Event The 2009 Barnsley Marathon
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
21Sponsorship (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)
22Adventure Fundraisingin 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
23What 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
24Gift Aid benefit limitsSection (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)
25Membership 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.
26Membership Subscriptions
- Family Memberships can be Gift Aided - provided
the subscription includes membership for the
donor - Paying other peoples 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
27Donations 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
28Donations 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.
29NOT 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
30How 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 charitys Gift Aid claims
31What 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.
32What 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
33Prevention 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.
34What 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
35Most Common Errors
- No declaration held by charity
- No evidence of receipt of donation
- Payment not received from an Individual
- Payment not a Gift
36Time 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.
37Time 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.
38Further Advice
08453 02 02 03 HMRC (Charities) Help Line Gift
Aid, Charity Tax returns, VAT queries, Trading
Community Amateur Sports Clubs (CASCs)
39Website
E-mail
Charities_at_hmrc.gov.uk
40Any Questions?
41Ian GledhillHMRC (Charities)