Online giving site JustGiving has reached an agreement with HMRC that will see thousands of charities regain Gift Aid income that had been rejected by HMRC because it appeared to come from more than one family member.
JustGiving, along with other charities, experienced a sudden rise in rejections of Gift Aid submissions to HMRC towards the end of 2015, the result of more stringent application of regulations. Evidence of ‘family donations’ or ‘social giving’ was taken to indicate that the donation was not made out of taxed paid by one individual, and so did not qualify for Gift Aid.
Multiple names triggered Gift Aid rejections
JustGiving’s site, which encourages donors to leave public messages of support, was found to contain messages such as “with love from Mum and Dad’. These could be taken to indicate that the donation was made jointly and not by an individual tax-payer and therefore would not qualify under Gift Aid. Similarly, posting two names in the message box sender field was interpreted in the same way.
Indeed, the giving service was instructed to apply this stricter definition retrospectively, with the result that the Gift Aid element on earlier donations was cancelled, resulting in charities finding that their anticipated income had suddenly dropped.
The Daily Mail’s Money section today cites examples of donors who found that their Gift Aid declaration had been removed retrospectively in Shameless HMRC grabbing thousands in charity cash: Why writing ‘love mum and dad’ on donations lets taxman pocket a fat slice.
It quotes one donor who donated £300 at Christmas to a hospice that had cared for his son who found his £75 Gift Aid payment had disappeared from the giving page. He said:
“Of course I’m going to write my wife’s name on a message to our son. We are his mum and dad. But that shouldn’t mean my donation isn’t eligible for Gift Aid — I was donating my money from my bank account that I’d earned and paid tax on.”
JustGiving has worked with HMRC over 15 years, since it first started handling online Gift Aid declarations. HMRC assured it that the crackdown was not limited to online donations or sites that promoted ‘social giving’, but was part of a sector-wide attempt to improve the way Gift Aid was applied.
Fortunately, JustGiving and HMRC have now reached an agreement that will result in many of these previously rejected Gift Aid declarations being accepted. JustGiving was able to present HMRC with feedback from donors and charities on why people chose to mention more than one name in their comments.
Up to four names of linked family members accepted
A temporary lifting of the family name restriction has now been agreed. This means that JustGiving will now be able to claim Gift Aid on donations that feature comments from up to four names of linked family members.
Even better, HRMC is permitting JustGiving to claim Gift Aid retrospectively on all donations from November 2015 to now that comply with this new definition.
JustGiving describe this retrospective processing to be “challenging”. It is advising charities to expect the payments to be phased in over several weeks. Any successful retrospective transactions will be flagged up in JustGiving’s reporting to charities.
At present it is still working on a clear process, and once it does, charities affected will be notified.
In a blog post on the subject, JustGiving’s Head of Partnerships Katherine Scott-Barrett wrote:
“Our ambition has always been to ensure that every UK taxpayer entitled to claim Gift Aid on their charitable donation is able to do so, and we will continue to work closely with HMRC to ensure that Gift Aid is applied accurately and fairly, while making the experience as intuitive as possible for donors”.