HMRC have amended their guidance for charities that operate a simplified process for claiming Gift Aid on donations from the sale of donated goods to explain how repayment claims will be affected when HMRC identify donations given by non-taxpayers.
While Gift Aid does not apply if a person simply donates goods to a charity, it can be claimed if a donor agrees to donate the sale proceeds of the goods to the charity. The guidance points out that the income generated from the sale of goods by a charity or Community Amateur Sports Clubs (CASCs) may have tax implications for the donor of goods. It is therefore important, in such cases, that shop staff make sure that the donor understands these implications, one of which is that the scheme is not suitable for non-taxpayers.
If, during an audit or other review, HMRC identify that there is insufficient tax to cover a Gift-Aid donation, the charity would, if asked by HMRC, have to voluntarily repay the Gift Aid so that HMRC would not have to approach individual donors. This means the charity would have to repay the tax on behalf of the individual. Shop staff should, therefore, make sure that a donor is a taxpayer before encouraging them to use the scheme and to watch out for elderly people, children and the unemployed as most would be non-taxpayers.
If you have any queries or concerns regarding the above then please contact Lesley Malkin, Accounts Partner.