Charities urge HMRC to pause on three-stage Gift Aid checks

03 Apr 2017 News

Charity infrastructure bodies have called on HM Revenue & Customs to pause discussions over a three-stage check for donors registering for Gift Aid, saying that they have not been consulted on the changes.

Last week Steve Carroll, part of HMRC’s charities outreach team, told delegates at the Charity Tax Group's Annual Tax Conference that three statements should be agreed by donors to prevent Gift Aid being registered inaccurately, rather than the existing check, which just asks if a donor is a UK taxpayer.

Carroll said that £1m a month was being wrongly claimed, and some institutions had an error rate of up to 60 per cent.

At present the three-stage declaration is being presented as best practice, not a mandatory position, however charities are concerned that HMRC plans to tighten the rules, and have asked it to consult before taking further steps.

While sector bodies have voiced support for the need to ensure Gift Aid is only claimed on eligible donation, some have questioned the steps taken by HMRC to tackle the issue.

CFG: 'HMRC must consider the impact on the sector'

The Charity Finance Group warned the further checks could hit charities’ incomes, as they are likely to lower the number of donors registering for Gift Aid.

Andrew O’Brien, head of policy and engagement at the Charity Finance Group described it as a "significant change to Gift Aid" which has been "put it forward without consultation or consideration of its effectiveness" and called on HMRC to pause so that it could be discussed. 

“This change follows last year's declaration changes which is already having an impact upon take up rates.

“HMRC should pause this issue so that we have time to discuss it in detail, consider the best options to educate donors and not make any knee-jerk changes.

“At a time when charities are under considerable financial pressure, HMRC must consider the financial impact of its decisions on the sector."

IoF: 'We mustn't put people off giving'

Daniel Fluskey, the Institute of Fundraising’s head of policy and research, also expressed concern about the impact of the new guidance.

He said: “It’s really important that new requirements encourage Gift Aid on donations and don’t put people off. The process also needs to easily work for charities and provide for a good experience for individuals.

“It would have been better for this to have been informed through wider engagement with the sector so that a solution that best works for all could have been identified. We’ll be talking to HMRC on how we think this can be improved.”

NCVO, meanwhile, said it was keen to ensure the Gift Aid process remained "as simple as possible to encourage participation".

But senior policy officer Michael Birtwhistle said the three-stage checks were not "excessively onerous".

Last week, Chris Lane, policy adviser at CTG said it was good that  HMRC would implement a “gradual transition” from the current one-line confirmation check.

But he said it was going “too far to insist charities include the new confirmation statements in everything”.

For instance, he said when a donor is trying to set up a direct debit it would be unnecessary for them to have to agree to the above statements as the money is clearly coming only from themselves.

Lane said some fundraisers had concerns the changes could put off potential donors if not enough flexibility is allowed for charities to amend the wording.


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