Gift Aid

Gift Aid

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If a UK resident but Non UK domiciled individual who has a UK higher rate liability, make a donation to an overseas account of a UK Charity uner the Gift Aid scheme.

If he can, and does, does the fact that the Charity then applies the funds for charitable purposes in the UK mean that the donation has been remitted to the UK as far as the individual is concerned.

In the scenario I have in mind the UK charity was established by the individual concerned

Any thoughts
Barson

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By wdr
30th Jan 2007 23:38

sorry David-where's the connection between ITEPA and gift Aid?
There is no'corresponding payment' involved here. If your question is whether s355 is otiose because pension contributions would be protected from remittance rules underSharon, v Carter, then that is mistaken-because a pension contribution is not a gift.

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By User deleted
30th Jan 2007 14:14

This works!
The reason is a mismatch between the remittance rules and the gift aid rules. What you are trying to do is reduce a UK tax liability by making a payment under Gift Aid.
all that is required for Gift Aid relief is that the provsions of FA 200 s25(as amended) are met.
These are

25(1) For the purposes of this section, a gift to a charity by an individual (“the donor” ) is a qualifying donation if–
(a) it is made on or after 1st October 1990,
(b) it satisfies the requirements of subsection (2) below, and
(c) the donor gives an appropriate declaration in relation to it to the charity.

(2) A gift satisfies the requirements of this subsection if–
(a) it takes the form of a payment of a sum of money;
(b) it is not subject to a condition as to repayment;....

Payment to the non UK account of a charity meets that requirement..

Is that a 'remittance'-no , because it is a gift completed abroad[Carter v Sharon]
QED
This arrangement is ceratianly advocated by at least one 'big4' firm and specialist lawyers in the field.
Go for it

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By User deleted
30th Jan 2007 14:29

Many Thanks.....
..for your clear answer.

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By k40911
30th Jan 2007 15:14

Corresponding payment relief
This may be a dense question or I am just feeling dull, but how does this interact with Section 355 of ITEPA?

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By djw090
30th Jan 2007 12:14

2 issues here
Firstly, for the charity to claim back the tax the person giving them the money has to confirm they have paid or will be paying UK tax on it. So if your client is not paying UK tax on that money the charity can not have the tax back. If one makes a mistake and gives more under gift aid than ones taxed income one has to make good the shortfall to HMRC.

Secondly, as a non dom the client is only liable to pay tax on income remitted to the UK. So does paying it to an overseas account of a UK resident charity count as remitting it to the UK? The answer is I don't know. Try asking HMRC!!!!!!

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By User deleted
30th Jan 2007 13:26

Thanks....
... that. The scenario is as follows. Client has "inadvertantly" remitted £2m income to UK 2005/2006 and is facing a 40% tax charge tomorrow.

He has other UK income which takes him to 40%.

He already has an established UK charitable foundation.


To reduce the tax charge to only basic rate can he make a donation (78% of £2m) today or tomorrow and carry back to 2005/2006. His return has not yet been submitted to HMRC

As in my original question the points at issue are:

1) does a donation to an overseas account (out of overseas funds) qualify under gift aid. Without this he has sufficient UK tax in charge to cover the basic rate tax on the donation.

2) if the charity then brings the money into the UK is that a constructive remttance for him.

Any further thoughts would be appreciated as time is running out

Thanks

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