Gift Aid tax reclaims - alarm over new restriction

This rather imprecise announcement from HM Revenue and Customs has troubled some of our clients evidenced by the number of enquiries we have received from readers of our popular Budget Bulletin (for more detail, see our Budget 2010 Briefing Paper). In response, I hope that I can remove many of the fears currently being expressed.

HMRC have not settled on the precise parameters of their proposed restrictions and will be informally consulting with Stewardship (and a few other representatives in the charity sector) on what they regard as unacceptable in terms of size and frequency. They have been told that the cash flow of small charities needs to be protected and they are mindful of this. So far as I understand it, their real problem is with trivial claims that are completely uneconomical to process. For example, it seems that some charities submit claims every few days for just a few donations!

So, I am optimistic at this stage that the reforms will be sensible and practical. If your church or charity makes claims for (say) £1,000 at a time, I don’t expect there to be any problem. The worst case scenario that I can foresee is a restriction to quarterly claims. Even then, I doubt that charities claiming large amounts on a regular basis will be restricted in this way.