Hi,
I help out a charity which deals with relationship counselling. They claim gift aid on the difference between the value of 'contributions' from clients and the direct costs of the counselling session (ie, counsellors and chaperones wages).
I've re acquainted myself with HMRC's rules on donations with benefits, and they seem quite clear: if the donor benefits from their donation, that donation will not qualify for gift aid. (If the donation comes attached with a condition that it buys goods or services from the donor.... - these are not gifts'.
However - I am aware that other branches of this charity claim gift aid on all donations - many without even making a deduction for the direct costs element. I am also aware that other counselling charities claim gift aid in the same way.
Can anybody shine any light on this? If I'm going to make myself very unpopular by telling them they can't continue to claim gift aid I want to be pretty sure I'm right!
Many thanks for any help given
Ali
Replies (3)
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Gift Aid & benefits
I suggest you take a closer look at the HMRC guidance found here:
http://www.hmrc.gov.uk/charities/guidance-notes/chapter3/sectiond.htm
The sections applicable are 3.28-30.
Basically there are 2 tests you need to consider when determining whether gift aid applies. The guidance is pretty clear I think.
From what you say it looks as though the charity will need to split out the donation received between the donation for gift aid purposes and the benefits. I've come across gift aid declarations produced by charities in the past which show this split so hopefully your charity can come up with something similar and not lose out.
Hope this helps.
Phil
Gift Aid & benefits
Hi Ali,
What exactly are the 'direct costs' you refer to? I just wonder whether this is counted as 'benefits' for the purposes of gift aid.
According to the HMRC guidance at 3.26.1, a benefit is defined as being an item or service associated with the donation so I think you need to consider whether or not the conditions in 3.26 apply or not and go from there.
Unfortunately all my past experience on gift aid comes from dealing with the personal tax affairs of the donor, not the perspective of a charity so sorry I can't give a more detailed answer.
Good luck.
Phil