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Gift aid on repaid donations.

An appeal failed and the Charity Commission allowed contributions repaid . What about the gift aid?

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Here is a problem put to me that I can't answer, being retired.

A taxpayer made monthly contrubutions in 2015-2016 , 2016-2017 and 2017-2018 to an appeal, which failed to achieve its objects.  Rather than come up with a cy-pres scheme the Charity Commission authorisised the charity to repay  the contributions.

These had been subject to gift aid.  I have dissuaded the taxpayer from asking HMRC to work it out, as they might  seek to reopen the relevant years , on the grounds he has had an unexpected benefit, namely his money back.  If he had to reopen earlier years  he could relate back to 2017-2018 if he claimed by 31/01/19, but not earlier years. I would have suggested he declare the returned contributions as income in the year it was received, with a white space declaration explaining what it was.  He could then pay them into another charity, thus covering the income  declared, and avoiding any higher rate liability.  The enquiry window would close a year later.

I couldn't find anything in HMRC's manuals,  although SAM112040  tells their officers how to get their money back if the overrepayment arose through taxpayer error. He didn't make an error. And no amount of googling has come up with and answer.

Has any reader got any wisdom on this one?

Replies (3)

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By Wanderer
18th Oct 2018 16:24

Why not pay it to another charity and forget about it?

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By Tax Dragon
18th Oct 2018 18:06

Presumably if the charity is repaying the donations it will also be refunding HMRC the tax it reclaimed.

So, to get that tax relief to the next charity, your approach seems pragmatic.

I have no idea whether it is also right.

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Replying to Tax Dragon:
By Ken of Chester le Street
19th Oct 2018 11:21

I presume the charity will make a return to HMRC of the repaid contributions.
Suppose he asked the charity to transfer his contributions to another charity. He would not get further relief for the second charity, so HMRC are not out of pocket.

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