HMRC has published new model wording for Gift Aid Declarations for one-off donations, multiple donations and sponsored events. It can be used from now on, but must be used from 5 April 2016.
What has changed?
• The new Declaration is shorter in that it removes unnecessary references to VAT and Council Tax.
• It contains a clearer call to action to demonstrate the value of making a Gift Aid claim.
• It includes new wording that make clear the responsibility of donors to have paid sufficient tax to cover their Gift Aid donation, and their responsibility to pay any difference.
No change to existing declarations
The new Declaration applies to all new donations. Declarations that are already in place will not have to be updated. Consequently, charities do not have to spend time and money inviting donors to update existing declarations.
HMRC recommends that all charities and Community Amateur Sports Clubs (CASCs) use the wording of the HMRC approved model declaration. However, that they remain free to adapt the model declaration, for example to include their own branding or additional messages.
You can see what must be included in a Gift Aid Declaration in the newly updated Chapter 3.6.2 of the HMRC guidance.
The changes were made following a series of discussions with the Charity Tax Forum Gift Aid Working Group. John Hemming, chairman of the Charity Tax Group, which is a member of the Working Group, commented:
“The introduction of a shorter Gift Aid Declaration is a welcome development which should help to ensure that Gift Aid is easier to understand for donors, maximising take-up by those eligible for the scheme. We are pleased that following discussions with the sector HMRC has agreed to phase the implementation of the new Gift Aid Declarations until April next year. However, more needs to be done to promote awareness of this change, to ensure that charities are compliant with the new Gift Aid declaration and do not face the prospect of invalid claims. We will also continue to work with officials to ensure that the Gift Aid Declaration is as flexible as possible for use on digital platforms, including SMS, where take-up is still too low.”
The Charity Tax Group did express concern that the increased focus on personal tax status could have a chilling effect on some donors. However, it accepted that Gift Aid had to operate correctly and that the new wording was at least an improvement on earlier HMRC drafts which stated that donors would be liable for any tax shortfall.
The Low Incomes Tax Reform Group (LITRG) was more critical of this new wording. It called on HMRC not to pursue non-tax paying people for any tax due on donations they make under Gift Aid, arguing that it was fairer that reimbursements should come from the charity. It argued that HMRC could end up “targeting compassionate individuals” to redress Gift Aid blunders.
Anthony Thomas, Chairman of the Low Incomes Tax Reform Group, said:
“When the widow is generous with her mite, the last thing we want is for HMRC to pursue her for tax on the donation.”
“It is salutary to reflect that if a donor makes a gift of £80 under Gift Aid which is subsequently found not to be due, then, if the charity repays the £20, it will be no worse off than if the gift had not been made under Gift Aid in the first place. But, if the donor repays the £20, the charity will benefit by £20 which was not due to it and the donor will be £20 worse off than they had expected or intended.
“Twice in the past 13 years, when Finance Bill clauses on Gift Aid have been debated in Parliament, a Treasury minister has given an assurance that when a non-taxpayer makes a gift and mistakenly uses Gift Aid, HMRC’s practice is to approach the charity for reimbursement of the tax element of the gift, rather than the donor. The same should apply when a donor erroneously continues with a regular gift under a Gift Aid declaration made when they were a taxpayer.”
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