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Umbrella bodies present united front to gift aid consultation

Fundraising | Becky Slack | 1 Oct 2007

The amount of gift aid a charity reclaims should be based on the level of voluntary income it reports in its accounts and the tax-paying status of people who give to charity, according to proposals from six sector membership bodies.

Under the new proposals, submitted to the government's gift aid consultation before it closed on Sunday, the details on how such a level could be calculated would be decided following consultation between the government and the sector, while a survey would determine what percentage of donors were taxpayers.

Six sector membership bodies, including the NCVO, acevo and the Institute of Fundraising, submitted the proposals in a bid to create a simple and effective gift aid system that would benefit all charities large and small.

The other bodies that highlighted the same proposal within their submission to the consultation were the Charity Finance Directors' Group, Charity Tax Group and the Church of England.

It is widely recognised that the current system is an administrative burden on charities, requiring complex accounting practices and costly audits. The membership bodies said that under their system these problems would be eradicated, with giving also increased.

It is believed that as all donations by taxpayers under the proposals would be automatically eligible for gift aid, even those made via the collection box, it would encourage more individuals to give.

The accounts-based method would also allow any HMRC audits to be conducted via the charity's annual accounts, which will also have been subject to an independent audit as part of its governance responsibilities.

"We believe charities are mature enough to administer these proposals through their books, which HMRC are free to come and inspect if they wish," said Christopher Dawes, a consultant acting on behalf of Church of England.

The issue of gift aid and charity shops was not overlooked with the group proposing that the relief should be applicable on goods as well as financial donations.

"The agreement would be that whatever value is raised from the sale of goods can be gift aid-able," said David Moir at the Association of Charity Shops. "It will give shops predictability and make audit trails much simpler."

The proposals were the result of considerable discussion between the organisations and their members and were said to reflect the majority of views.

"We have all found strength of feeling behind the proposals," said Helen Donoghue, director of the Charity Tax Group. "Every submission we have seen from our members echoes what you see here."

Each organisation has submitted its own response to the consultation with this proposal at the core of each. While each submission will also feature other suggestions for change, some earlier ideas will not be included, including that of decoupling gift aid from the rate of tax.

The Institute of Fundraising, which had been looking into this suggestion, said that legal advice had highlighted how decoupling would change the nature of gift aid from a tax relief to government expenditure.

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