Why April 1st 2010 is no joke
Howard Lake | 20 October 2009 | Blogs
A recent report by CAF and NVCO estimates that almost £750 million is lost to the sector in unclaimed Gift Aid. Although this refers to potential additional income that could be earned, it does include donations which have been given with Gift Aid Declarations but where the Gift Aid has simply not been processed or claimed.
This is like charities getting donations with Gift Aid Declarations where the money has been banked but the Gift Aid Declarations are put in a shoe box and pushed under a desk. (I did in fact witness this very thing at one charity).
This state of affairs is compounded by the fact that as of 1 April 2010 the window of opportunity in which to back claim Gift Aid reduces from six to four years. This Cinderella-like scenario means at the stroke of midnight on 31st March 2010 (which is less than six months away), two years of potential Gift Aid will simply be swallowed back into HMRC’s coffers and lost to the charity sector for good.
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As a rough estimate, based on the figure quoted, at least several hundreds of millions of the £1.5 billion unclaimed Gift Aid will be lost overnight. No wonder that the Government has not made more noise about this: it is not often they can save themselves this sort of money, simply by keeping quiet.
So what can be done about this? Despite what may have been written in the past about claiming Gift Aid, it is not much different from any other aspect of tax: you have to get it right.
In a nutshell, HMRC are there to collect money in taxes, not to pay it out: that is the Treasury’s job.
So when a situation arises like Gift Aid where they have to pay out (tax) money, you can be sure that they will check every item to make sure that the claim is valid. But if you, as a charity make sure that you get it right, then this is free money which will simply roll into your bank.
And even if you do get it wrong, HMRC will, within reason, allow you to fix certain inconsistencies as well as allow a small margin of error overall, although I would not suggest as a charity you rely on this.
The point is that, at the end of the day this is free money which I believe charities should be prepared to crawl through barbed wire to get at.
But if, for whatever reason, you, as a charity, still do not feel comfortable or confident about doing this, do not let this opportunity go by. After all, you may be happy to change a plug on your kettle or a washer on your tap, but might not re-wire your house or re-plumb your bathroom.
The same applies to Gift Aid recovery – if you do not feel you can do the job, then employ someone who can – your accountant, financial advisor, lawyer, tax consultant. Be prepared to pay them for this service because after all a portion of something is better than 100% of nothing.
This is a once in a lifetime opportunity. However, there is no glass slipper so if you don’t get your claim in by mid-night, you could spend a long time in the cinders, with your begging bowl out, battling against the ugly sisters in the sector for funds.
About Barry Gower
Barry Gower is MD of Gift Aid consultancy GAIN, which specialises in Gift Aid recovery and innovative implementations of Gift Aid. For example it has developed some more unusual approved methods such as Gift Aid on charity dinners, fundraising event (golf) days and recycled cartridges.
GAIN offers UK charities a review of their donor data at no charge, producing an indication for the scale of potential Gift Aid recovery on donations that have not been claimed on.
About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.