Charities will not be required to collect full forenames from 1 April but are strongly encouraged to do so wherever possible in future.
According to the Charity Tax Group, at Charity Tax Forum meetings earlier this year, HMRC had proposed that charities should collect full forenames from April 2019, rather than the current minimum requirement of an initial required for a Gift Aid Declaration to be valid. The proposal was aimed at reducing the ‘tax gap’ resulting from Gift Aid claims being made where the donor has not paid sufficient tax to cover the claim made by the charity.
However members of CTG’s Gift Aid working group expressed concerns about the proposal as well as the timeline for introducing it.
CTG cautioned that this approach would result in charities losing more legitimate Gift Aid than the value of incorrectly claimed Gift Aid HMRC would save. This month for example, a parliamentary question on Gift Aid fraud revealed that there were just two prosecutions against Gift Aid fraud last year, which resulted in two successful convictions. At the end of last year, there were 22 ongoing investigations into Gift Aid Fraud.
CTG also argued for trying a range of approaches instead, including encouraging charities better reporting address/contact information and reminding donors with older declarations to renew them if possible. It also urged HMRC not to make any changes mandatory or tied to a tight implementation schedule.
Following a meeting between HMRC and CTG in January, it was agreed that there will be no mandatory implementation or hard start date but that charities will be strongly encouraged to provide HMRC with full forenames where practical and possible to do so. HMRC is looking to see a gradual improvement in claims including full forenames to help ensure donor eligibility to claim Gift Aid. There will also be no retrospective action taken, meaning current Gift Aid Declarations will remain valid.
Charities are also encouraged to document any actions undertaken to improve collection of first name information.
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