Save the cost of administering GiftAid for HMRC and charities.


I work as a voluntary IT consultant for a number of charities based in London and I have found that all of them find the administration of GiftAid burdensome and worrying.


Tens of thousands of charities benefit from GiftAid, BUT, the way in which it is administered is onerous and expensive for HMRC and for the charities. Charities are compelled to keep proof of all of the GiftAid declarations that they receive from individual donors and to produce them when audited by HMRC. The proof may be in the form hand written of tear-off slips, user designed forms , hard copy letters or , in larger charities scanned records of the originals of these documents. The labour involved in keeping, filing and recovering these records is considerable and the penalty for mistakes can be severe. I know one charity that has something like a cubic metre of small slips filed in bundles ready for the next audit. When the HMRC inspector finds an error that favours the charity he will then estimate the number of errors based on the sample size ratio to the full claim. One charity where I worked was charged many thousands of pounds for a mistake that had increased their claim by about £100.


A much better way to administer GiftAid would be for the Government to decide that all donations to registered charities from individuals should attract GiftAid at a rate slightly lower that that prevailing at the moment. Charities should then show the income from individuals as a separate income stream that could be audited as part of their annual audit and the GiftAid element signed off by the auditor. This would mean that hand written Giftaid declarations would be unnecessary as would be the tedious auditing of them by HMRC, saving both HMRC and the charities time and money.

Why is this idea important?

Because would save the time of skilled HMRC personel and charity staff being used on a task that could be securely carried out with much less effort and expense.

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