Benefit of the doubt

by | Sep 26, 2016

I’ve spent years dealing with Gift Aid, and appreciate that I don’t know everything about it, but recently I had my noodles fried trying to work out HMRC’s benefit rules.

For those of you that are not familiar with this arcane piece of legislation, here goes.

All donations that are freely given, and where nothing is received in return can be Gift Aided. The definition of “nothing received in return” means that where there is any element of personal gain, or the money you are paying is in return for something, then you cannot claim Gift Aid.

This is easy. It’s why we can claim on a cash donation but we can’t claim on a raffle ticket.

However, the case I had recently is for a client who offers a simple membership scheme. In return for an amount of money, annually, the member receives some literature and other information as well as regular updates.

Superficially this means that, although modest, this would not be allowable. But the benefit rule states that if the benefit is:

– Less than 25% of the amount given (between £1 and £100) you can include the base amount in a claim;

– For amounts between £100 and £1,000 the value of the benefit is capped at £25;

– For amounts over £1,000 the value of the benefit can be 5% up to a maximum of £2,500.

But wait, there’s even more. Literature is of inconsequential value, so doesn’t count at all. Entrance to a facility has to incur an uplift of 10% and access for a minimum of 12 months so that Gift Aid can be claimed, as long as it’s not a sports or other facility. I’m stumped at this one – what the heck constitutes another type of facility? Maybe this is some weirdly worded “look but don’t touch” rule. So if I go to look at something it’s OK, but if it’s a place where I would be involved then HMRC deem it , you know, a bit wrong. Next time I visit Kew and see the signs around about not touching the plants, I’ll know they couldn’t care less about them, it’s just they don’t want to pay back the Gift Aid money!

I’ve been reading a document produced by HMRC which discusses the need for evidence on the benefit rule. This evidence will prove the need to simplify the rule to a level which can be understood. By anyone.

Paragraph 1.18 is a doozy “Many charities have difficulty understanding the current Donor Benefit Rules. It is our understanding that, in some cases, charities decide to forego claiming Gift Aid on some donations rather than seek to understand, and ensure that they are compliant with, the existing rules.”

This is from the entity which tells us that £750million goes unclaimed in Gift Aid each year.

Yes, HMRC, it does need changing. But then so does the rest of the legislation.

I’ve banged on about this before, in one of my blogs, but I find this bland, underwhelming statement an insult to our intelligence. It feels like that thing when someone asks why everyone is avoiding them; clearly the issue has to do with all the avoiders rather than the single questioner who is clocked in a delightful green miasma of BO.

If in doubt, it’s likely to be the fault of the one rather than an error of the many.

In fairness, the document I’ve been reading is a call for the legislation to be simplified. The argument for this, that I posed in my earlier blog, was with such an amount of money going unclaimed, even if some people get it a bit (unintentionally) wrong, would it be such a bad thing? There’s enough money in the kitty to provide a reasonable margin for error, which will mitigate the risk to the government’s coffers that will inevitably occur with a simplified criteria.

Please don’t read this as me advocating slap dash claiming – I’m a firm advocate for being accurate and getting it right. But rounding the edges a little on legislation that is impractical and is a barrier to doing the right thing, well that’s OK, surely?

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