HM Revenue & Customs more than doubled the number of investigations into claims for gift aid in the tax year 2012/13, according to figures obtained under the Freedom of Information Act.

The figures, obtained by accountancy firm Wilkins Kennedy, show that HMRC carried out 1,057 checks and audits of charity claims for gift aid tax relief in 2012/13, up from 510 the year before.

As a result HMRC reclaimed more than £6m in additional tax.

Charities may have to repay money in the case of fraud, if they have made an error, or if they do not have the proper paperwork to demonstrate they are entitled to the tax relief.
 
John Howard, a partner at Wilkins Kennedy, said that HMRC had been driven to carry out more investigations following the case of the Cup Trust, a charity which raised £176m as part of a tax avoidance scheme.
 
“HMRC is on the lookout for charities it believes have been set up for tax, rather than charitable, purposes and root out cases where the donors’ main aim is avoidance,” he said.

“Although cases of deliberate abuse or fraud are rare, when it uncovers anything suspicious, it’s going to use all the tools at its disposal to take action.
 
“However, what’s also worrying for the charity sector is that it seems to be uncovering so many instances where tax is being underpaid because honest mistakes are being made using gift aid. Those charities that haven’t got their house in order are still going to be penalised, and will have to pay it back with interest.”