GiftAid Disaster

I would see if the charity will pay back the gift aid they have claimed from HMRC. Although I would think this is very unlikely!

I dont see what else can be done which negates this 'tax'.

What does the form the charity uses actually say? Does it remind the taxpayer about the tax payment issue?

Did he really understand what he was signing?

I think the case has to be put to the charity that a large donation with gift aid needs rather more attention on the usual and that they owe such a donor some duty of care in asking him to sign a gift aid declaration - indeed arguably if they specifically asked him to sign one they assumed a duty of care which it seems they did not fulfil in explaining to him what was involved & might even then be liable to him in negligence (but this is probably pushing the law of negligence quite wide!). Perhaps then they can be persuaded to return the money to HMRC or indeed to him to pay HMRC which is probably the easiest way to resolve it.

If they do not agree, suggest you take it up with the diocese or whatever for the church concerned and bluntly consider embarassing them into helping him resolve the situation. Or even make it known to congregation/local press.

To be fair to HMRC it's not their fault if someone signs a Gift Aid declaration without knowing what it implies. It's up to the charity to sort this out equitably.

(by the way if there were a revocation provision this could be quite tricky as HMRC could be repaying only for taxpayer to revoke retrospectively and they do not get the money back - in other words as a practical matter not sure it works).

I presume your client is connected with this church in some way?  If so it should be fairly easy to make an informal, discrete approach to the vicar.  As a lot of money is involved he may need to talk to the Treasurer and/or finance team but this issue needn't result in your client's finances becoming a topic of general knowledge/speculation.  

Speaking as a former member of my church's PCC I know how expensive churches are to maintain and how important gift aid is to a church's finances.  But, I would be horrified to discover that such a kind, generous donation resulted in hardship and distress.  Church finances can be a bit labyrinthine as they need to comply with modern charity law as well as older covenants & restrictions etc, but there are general and discretionary funds available and if the 'buildings fund' cannot repay the gift aid there should be a mechanism for doing this through other channels.

Point out to the revenue the statement made in Parliament, which means that the Revenue should try to get the money back from the charity before pursuing the taxpayer.

The Economic Secretary to the Treasury, John Healey:Hansard 6 July 2004: Column 728Where it is established, however, that a donor has not paid enough tax to cover the value of the gift aid, the Inland Revenue can, as I said, assess the donor to recover that overpayment. However, as the hon. Gentleman said, I gave an undertaking during the proceedings on the Finance Bill in 2002 that, in many cases, the Inland Revenue will explain the situation first to the charity, which will then decide voluntarily to repay the amount of the tax reclaimed. 

Reference might be made to the line of cases following Hastings-Bass with a view to having the declaration set aside, although this would presumably be an expensive solution.

Had the son's estate been liable to IHT an instrument of variation would have precluded Gift Aid on the authority of St Dunstan's v Major.

Most ordinary tax payers do not understand that if they have not paid enough tax to cover the gift aid the Revenue will come on to them. Miras worked differently, If the tax payer did not pay enough tax the mortgage lender still got the full amount. The same goes with stakeholder pensions or Relief at source. So why should the ordinary taxpayer expect things different here.

Do not put a stumbling block in front of the blind. That is what the church should be told in this particular instance. And if the Vicar says that he did not know about the full implications of signing a Gift Aid Declaration then why should he expect one of his parishioners to understand.

I want to see a warning next to Gift Aid Declarations. "If you have not paid enough tax to cover the Gift Aid the HMRC will pursue you for the money"

Currently the only identity required when signing Gift Aid Declarations is the Name and address and the Signature. How many declarations are not tied up to the tax payer? Are we allowed to know this under Freedom of Information Rules? I would bet under a certain value the Revenue do not check. I feel it is only fair that over-claimed Gift Aid should be charged back to the Charity as there is no warning given to the giver.

I am not totally well and very often do not earn enough to pay tax. When I say my wife will sign the Gift Aid Declaration as she has a regular job and pays enough tax the Charity worker does not understand the rigmarole.

If this is their attitude I would not stop a the tax, I'd be wanting the full donation back on the basis that whatever "church" it is, it clearly does not live up to christiam values.

Go public - name and shame this church - make sure no one else ever donates to them. That, in my view, is your only option.   As for HMRC I suggest you simply repeatedly write to them stating that the donor was not made aware of the potential consequences of signing this declaration.  I would also involve his MP.

HMRC may be legally correct, but they sure as hell are not morally right.

Indeed ifr he had paid no tax for many years, it could be argued that upon receipt of this declaration, HMRC had a duty to contact the taxpayer and draw the potential liability to his attention.  Of course that would require intelligence and common sense on behalf of HMRC - which of course is something they certainly lack.

The only attitude we know of is HMRC who, per the last para of the OP, say that the declearation cannot be revoked. We do not know if the church has been approeched yet, we do not known if HMRC have asked for money back from charity or  taxpayer.

I see that more than one poster has been critical of the charity concerned.  We have no information as to whether they have been approached so why assume that it is necessary to launch in with complaints to the diocese/bishop/press/MP and why assume that the recipient of the donation is being 'unchristian'?  

We don't know if the church even knows there is an issue.  Having had involvement with church finance in the past I am sure that it will be possible to find a way to work this out in a way which ensures that the client is looked after.  Surely the first step is to talk to the vicar concerned?