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Ian Gledhill HMRC (Charities). 2000/2001 25,100 Charities claimed £221.5 million. Gift Aid Repayment claims. 2004/2005 60,329 Charities claimed £651.1 million. 2008/2009 75,000 + Charities claiming £990 million. Gift Aid Requirements. There are 4 main requirements for Gift Aid

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Ian Gledhill HMRC (Charities)

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Ian gledhill hmrc charities

Ian GledhillHMRC (Charities)


Gift aid repayment claims

2000/2001

25,100 Charities claimed £221.5 million

Gift Aid Repayment claims

2004/2005

  • 60,329 Charities claimed £651.1 million

2008/2009

  • 75,000 + Charities claiming £990 million


Gift aid requirements

Gift 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.


Requirement 1 uk charity casc

Requirement 1 – UK Charity / CASC

  • Charity usually registered with Charity Commission (England & Wales).

  • If not, may still be able to apply to HMRC.

  • CASC’s must register with HMRC.


Requirement 2 individual uk tax payer

Requirement 2 – Individual UK Tax payer

  • Individual must

  • be a UK taxpayer, and

  • have paid sufficient tax to cover the claim made to HMRC (Charities)


Tax to cover example

Tax to cover example

Individual’s

donation

£1,000

Charity claims

£250

Donor’s tax

- minimum

£250


Reduction in the basic rate of income tax

Reduction 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.


That tax can be

That 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


Requirement 3 gift aid declaration

Declaration

Requirement 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


Gift aid declaration

Declaration

Gift 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 SmithJ SmithMr J Smith.

  • We will not accept:-

  • Mr SmithSmithJohn


Gift aid declaration1

Declaration

Gift Aid declaration

Declaration must contain

  • Donors residential address


Addresses on gads i

Addresses 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


Addresses on gads ii

Addresses on GADs(ii)

NO ×

  • 11, HD8.

  • Park Street, Goole, HD8 9QA

  • 11 Park Street.

  • c/o Yates Wine Bar, Park St, Goole


Retention of declarations

Retention 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


Requirement 4 audit trail

Requirement 4 - Audit trail

Audit trail from each Donor:

Through the Charity’s books & records

and then into the Charity’s Bank account


Sample records donor register

Name of Donor

GADeclaration

Date

Amount

Type

Sample Records - Donor register

Mark Toner14/8/2000£5cash cash book

Eve Powell5/9/2000£10cheque banked 14/9

Mike Keller 6/9/2000£7.50cash cash book

Andrew Kayley15/9/2000£4cash cash book


Sample records church envelope register

Week 1

Week 2

GA Dec

Week 3

Week 51

Week 52

Total

Stan James £2£6£40

Andrew Kayley £1£1£1£1£1£16

Lola Jones £10£24

Fred Smith  £250£250£250£250£5000

TOTALS = £1£263£251£257£251£5,080

Sample records - Church envelope register


Cheque payments

Cheque payments

  • Name of payer to be shown in Bank paying in book

  • List separately if there are a large number of payments


Particular situations other fundraising events things to look out for hmrc audit

Particular SituationsOther Fundraising EventsThings To Look Out For – HMRC Audit


Sponsorship gift aid

Full NameHome AddressAmount Total

Please treatas Gift Aid

Clive Webster

21, Worthing Drive,Brighton BN4 1ZP

£1 per Pub

£26

Harry Potts

6, Nottingham Close,Derby D4 2YP

50p per Pub

£13

Bob Blackburn

14,

CH2 1PY

50p per Pub

£13

Sponsorship 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


Sponsorship and aggregated claims gift aid claim simplified procedure

Sponsorship (And Aggregated Claims) Gift Aid claim – simplified procedure

ParticipantDate of Payment Total Donation Received

Stan Smith19/05/09£50.00

Ian Gledhill21/05/09£39.00

Jane Brown28/05/09£72.00

R68(NGA)


Adventure fundraising in the uk

Adventure 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


What is a benefit

What 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


Gift aid benefit limits section 5a finance act 1990

Gift Aid benefit limits[Section (5A) Finance Act 1990]

Amount of donationValue of Benefits

£0 - £10025% of the donation

£101 - £1,000£25

£1,001 - £10,0005% 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)


Membership subscriptions

Membership 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.


Membership subscriptions1

Membership Subscriptions

  • Family Memberships can be Gift Aided - provided the subscription includes membership for the donor

  • Paying other people’s 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


Donations attracting right of free admission

Donations 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


Donations attracting right of free admission1

Donations 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.


Not gifts

NOT 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


How does hmrc decide who to audit

How 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 charity’s Gift Aid claims


What records are required by hmrc

What 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.


What will the auditor be looking for

What 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


Prevention is better than cure

Prevention 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.


What happens when the audit is finished

What 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


Most common errors

Most Common Errors

  • No declaration held by charity

  • No evidence of receipt of donation

  • Payment not received from an Individual

  • Payment not a Gift


Time limits for claiming gift aid

Time 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.


Time limits for claiming gift aid from april 2010

Time 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.


Further advice

Further Advice

Telephone

08453 02 02 03

HMRC (Charities) Help Line

Gift Aid, Charity Tax returns, VAT queries, Trading & Community Amateur Sports Clubs (CASCs)


Website

Website

www.hmrc.gov.uk

E-mail

[email protected]


Any questions

Any Questions?


Ian gledhill hmrc charities

Ian GledhillHMRC (Charities)


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