In light of GDPR, HMRC have recently updated their guidance in relation to Gift Aid
Gift aid is an extremely valuable tax relief available to charities or Community Amateur Sports Clubs (“CASC”). Where a valid gift aid claim is made a charity or CASC can claim an extra 25p for every £1 donated by an individual. HMRC statistics, released in June 2018, show that £1.26bn was repaid to charities through gift aid donations.
HMRC have recently updated their guidance in relation to Gift Aid, in light of the new General Data Protection Regulations (“GDPR”), which came into force on 25 May 2018. To make a valid gift aid claim, charities and CASCs are required to collect and retain personal information about individual donors. However, charities and CASCs must also be mindful of their obligations under the GDPR rules. Our recent blog in May 2018 will provide you with some useful information on what you need to know.
The relevant sections of the HMRC updated guidance are reproduced below. The changes are highlighted in bold:
Chapter 3.6 Gift Aid declarations, para 3.6.6
A charity may want to add more information and notes of its own on a declaration form. For example, the inclusion of any GDPR that the charity feels is needed. HMRC has no objection to this or to the inclusion of a declaration in other documents, such as standing order mandates, provided the statutory requirements for a Gift Aid declaration are met.
Chapter 3.7 Recording and audit of Gift Aid declarations, para 3.7.1
HMRC is required to ensure that any tax repaid to a charity is properly due and correctly calculated. HMRC does this by carrying out inspections to check that Gift Aid claims are made for the correct amounts and are backed by valid Gift Aid declarations and clear audit trails for the donation received. Section 3.7.2 will tell a charity how to be compliance for Gift Aid audit purposes. In addition to this, a charity should also be mindful of any GDPR obligations.
Chapter 3.9 Further information on the contents of the Gift Aid declaration, para 3.9.1
The donor’s name and home address
The declaration should show:
The donor’s full name – as a minimum HMRC will accept the donor’s initial and surname
- The donor’s full home postal address – as a minimum HMRC will accept the number (or name as appropriate) of their home and their full postcode.
If HMRC finds the details on a declaration are not enough to trace the donor, they may ask the charity to get more information to check the claim. If the charity fails to get this information it is likely that the declaration will be considered invalid. We would recommend that charities ask donors at regular intervals, possibly every 2 years, to check the personal details held. Any request like this would have to be GDPR compliant.
If a donor changes their name or address, this will not invalidate the declaration. If the charity is notified of a change in the donor’s name or address, it must keep a record of the updated information – this can be kept as an electronic copy such as a scanned document. The declaration itself does not need to be amended, but a record of the change should be kept on the charity’s database.
As can be seen from the extracts of the guidance copied above, it is vital that you maintain a clear audit trail and keep accurate records to protect your gift aid claims and ensure they stand up to HMRC scrutiny. Insufficient records can result in HMRC clawing back the tax relief made on the gift aid claims and potentially charging additional penalties.
If you have any questions about how to protect your gift aid claims and/or meeting your GDPR obligations, please get in touch.