Retail Gift Aid
Stephen Maudsley
Retail Gift Aid and Digital Donations Lead
Charities, Savings and International
HMRC - Gift Aid facts and figures 2015/16
• Gift Aid relief paid out to the charity sector – £1.26 billion
• £70 million claimed through Retail Gift Aid scheme on
donated goods
• Estimate of losses due to errors - £85million which
increases to £170 million when taking into account
avoidance and fraud.
• Tax to cover checks – 10% failure rate.
Protective marking – Unclassified, Protect, Restricted (delete as required)
Retail Gift Aid requirements
• Normally, Gift Aid only applies to gifts of money received
from an individual
• However, in certain situations, Gift Aid can be claimed by
Charities on the income from the sale of goods donated.
The following conditions must apply:
• The private individual retains legal and beneficial
ownership of the goods until they’re sold.
• the owner of the goods and the charity must both
understand that the charity (or its trading company) is
acting as the individual’s agent
Protective marking – Unclassified, Protect, Restricted (delete as required)
Retail Gift Aid requirements
The Charity Shop
The owner of the goods has the right to keep all of the net
proceeds of the sale, but can choose to donate all or part of
the proceeds if they wish
Donations must be from an individual who is a UK taxpayer
Goods must belong to the individual donor
Donor must make a valid Gift Aid declaration and complete
and agency agreement
Protective marking – Unclassified, Protect, Restricted (delete as required)
Sale of donated goods The Charity Shop
& Gift Aid
The 3 ways that charity shops can convert donated goods
into Gift Aid payments;
1. Standard Method – Charity writes to donor when goods
are sold & allows 21 days for donor to say they want
some/all of the sale proceeds
2. Method A – letter is issued when proceeds from donated
goods exceeds £100 in a tax year*
3. Method B - letter is issued when proceeds from donated
goods exceeds £1,000 in a tax year*
Protective marking – Unclassified, Protect, Restricted (delete as required)
HMRC “ We have a problem”
• A number of complaints received as to the operation of
Retail Gift Aid
• Appeared to be widespread errors and mistakes in the
application/operation of RGA, some potentially fraudulent.
Contributing factors deemed to be :
•
Lack of knowledge/understanding of staff/volunteers
• Bonuses, incentives and league tables linked to Gift Aid
take-up possibly sending out the wrong message.
Protective marking – Unclassified, Protect, Restricted (delete as required)
6
Proposed Action
• Work more closely with Charity sector, Charity Retail
Association, Intermediaries etc.
• Produce revised/simplified guidance:Chapter 3.42: of the Charities detailed guidance on the
Gov.UK website.
Protective marking – Unclassified, Protect, Restricted (delete as required)
Four important changes
• Operation of targets, league tables, bonuses, incentives or
other forms of rewarding higher claims are unacceptable.
• Revised wording on the GAD making the donor aware that
they are responsible for any shortfall in the tax to cover
• “End of year letters” detailing proceed from sales and Gift
Aid claimed are now compulsory for all donors where
charity uses methods A or B
• Shops must undertake spot checks/training of
staff/volunteers to ensure that they are fully conversant
with Gift Aid requirements.
Protective marking – Unclassified, Protect, Restricted (delete as required)
HMRC NL Standard | 05/08/2013 | 8
Retail Gift Aid Declaration
Protective marking – Unclassified, Protect, Restricted (delete as required)
| 9
Gift Aid on Rag
The Charity Shop
• Back in the summer of 2016 Paul Tate of Children’s
Society and Nisyst their systems provider agreed a pilot
• Over the next few months Paul, Nisyst and HMRC worked
closely together to ensure that their procedures were
compliant.
• This has now been piloted within their Chorley branch and
has been found to be worthwhile.
• Due to be rolled out to their other shops in the very near
future
Protective marking – Unclassified, Protect, Restricted (delete as required)
Gift Aid on Rag
The Charity Shop
• The same conditions apply as with retail Gift Aid
• The charity must already have, established, robust
procedures in place and staff must be fully conversant
with handling of Gift Aided goods.
• If possible donated Goods/Rag should be sorted in a
designated area free from non Gift Aided items to avoid
cross contamination.
Protective marking – Unclassified, Protect, Restricted (delete as required)
Gift Aid on Rag requirements
The Charity Shop
• Recommend that Gift Aided Rag be stored in different
coloured bags and , if possible, separate from non Gift
Aided Rag.
• Recommend that donated Rag is weighed prior to
collection.
• If Rag stored in same bag a control sheet must be
maintained, detailing individual donors and weight.
• Adopted procedure can be either manual or electronic in
line with current operational processes.
Protective marking – Unclassified, Protect, Restricted (delete as required)
Any Questions