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Tax implications: donations for a sick child?

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Sadly, one of my client's children was diagnosed with a rare form of cancer. Treatment was not available in the U.K and so various fundraising activities were organised in order to pay for this. This got quite a bit of coverage nationally and the donations were quite considerable. Unfortunately, the child passed away fairly quickly. This pot of donations has been sitting since then and my client is wondering if she needs to pay tax on it. I have a number of questions on this;

1) is anyone aware of any laws/legislation regarding leftover donations such as this? I didn't think my client would simply be allowed to keep the money for herself.

2) I know that any funds actually used for the medical treatment were not taxable, however, this leftover pot of money is surely taxable....can anyone confirm? FYI....no charity was set up to deal with donations.

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David Winch
By David Winch
24th May 2017 16:42

I suggest you urge your client to take legal advice. It may be that the best option is for the remaining funds to be donated to a recognised charity which assists sick children (i.e. one which has objectives similar to those for which the donations were made).
Alternatively it may be appropriate to return the donations (if that is possible).
The risk is that if the monies are used by your client for general living expenses that may be considered dishonest & could result in a police investigation and criminal charges (along the lines of fraud or theft).
Being subject to a police investigation would be acutely distressing to your client in the circumstances (even if the client was ultimately not prosecuted).
Obviously you will need to give this advice sensitively in the circumstances.
David

P.S. I do have experience (as a forensic accountant witness) of more than one police prosecution of a person who obtained donations / benefits / access to monies for the purpose of helping someone but ultimately the monies were used for another purpose. So there is a genuine risk for your client.

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By ms998
24th May 2017 16:49

A non technical / non tax answer.

From a moral perspective should the surplus donations be given to charity in line with the intention of the person donating?

This would at least give an argument that any "income" received would be offset against the donation and therefore would net off.

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