02 December 2015

HMRC publishes new gift aid declaration format

Graham Elliott
Consultant | UK

HMRC has made the long-awaited changes to the gift aid declaration form wording.

The new wording replaces and shortens the current declaration wording, which has been recognised by charities and HMRC as discouraging the donor to read and understand the terms and conditions of giving under gift aid. This has been replaced by a blunter and franker presentation of the position.

The new wording must be incorporated into charities' chosen words for their gift aid declaration no later than 6 April 2016. All declarations issued and signed by donors from that date must incorporate the new mandatory message. Up until then, it is a matter of choice as to whether to introduce the new wording. Declarations using the current wording, given prior to 6 April 2016, will remain valid and will not need to be replaced or renewed.

The significant difference between the old wording and the new is in the explicit reference to the liability on the donor to ensure that they have paid enough relevant tax. Although this requirement was always present in the gift aid declaration, the consequences of failing to meet it were not spelt out. This has been ‘rectified' in the new wording. It states clearly that any shortfall in the tax paid in the given tax year by the donor is the responsibility of the donor, as distinct from the responsibility of the charity.

The wording is silent on the mechanism by which any shortfall would be recovered, and in particular does not specify that the payment is due direct from the donor to HMRC as opposed to being due from the donor to charity. It is feared, however, that the message could dissuade not only those who do not pay sufficient tax, but also those who do. The words deployed for this purpose are as follows:

‘I am a UK taxpayer and understand that if I pay less Income Tax and/or Capital Gains Tax than the amount of Gift Aid claimed on all my donations in that tax year it is my responsibility to pay any difference.'

We might have expected that the ‘multiple donations' declaration form would specifically mention the danger of making donations in the future, when not enough tax might be paid, without having withdrawn the gift aid declaration. That point is not explicitly made however. There remains the danger that donors who enter into ‘enduring declarations' at a time when they pay sufficient tax to cover the gift aid status, will fail to withdraw the gift aid declaration while continuing to make donations regarding which the charity will have made gift aid claims.

Charities may think it is appropriate, in all of the circumstances, to emphasise particularly to those providing enduring gift aid declarations the need for them to remain aware of their tax status and of the personal liability that could arise in the future if they failed to withdraw the declaration at the appropriate moment.

Charities should also be aware that the fact that the liability rests with the donor, in that situation, can present a headache in terms of stepping in to meet any donor's liability, and charities should think carefully before accepting that liability, and should take professional advice concerning all of the circumstances.

Graham Elliott Consultant | London

Category: Article

Client types: Charities and non-profit