HMRC has clarified its guidance on Gift Aid declarations, stating that charities have until the end of 2012 to comply with new requirements by using new wording on declaration forms. In February, HMRC provided new model declarations, and a checklist of information to be included on declarations, stating that charities would be required to use the model declarations, or change the wording to their own declarations. However, the guidance did not make clear when the changes should take place, which led to a high volume of enquiries and expressions of concern from tax specialists.
HMRC released a statement on 23 March confirming that charities do not need to change their declaration forms immediately, and that existing ‘old style’ Gift Aid declarations will be accepted until 31 December 2012. However, charities are being encouraged to amend their declarations as soon as possible. Donors who have made recurring Gift Aid donations should also be informed of the change of declaration wording, which clarifies the amount of tax that must be paid to cover charitable donations.
In order for Gift Aid to be applicable, a donor must have paid enough tax to cover all of their charitable donations, and not just one particular donation being made to one particular charity. The required declaration wording has been updated to make this clearer to donors, and enable them to make a more informed declaration. This should reduce the amount of Gift Aid claims challenged by HMRC.
In the revised guidance, HMRC also highlighted an error in its previous guidance, which stated that a four year time limit on making claims also applied to the retention of records. In fact, Gift Aid records must be kept for a minimum of six years. Charities that may have already destroyed records over four years old will not be penalised in light of this error. However, charities that do still have those records must retain them.
Read more on HMRC's guidance on Gift Aid here.
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