Small Donations Scheme: A gift wrapped in red tape

Charity Finance Group, Charities Aid Foundation and NCVO have today submitted our joint response to a Government consultation on how the new Gift Aid Small Donations Scheme will operate.

NCVO has warmly welcomed the idea behind this new Scheme. It is basically about HMRC topping-up small donations to charities, where it wasn’t feasible to ask the donors to sign Gift-Aid declaration forms. This should in theory reduce paperwork and provide a small financial boost for charities. So far, so good…

And, for all the grief that the tax cap continues to cause us, there is no point looking a gift horse in the mouth. We know HMRC officials have spent a long time trying to get this one right and are consulting with the sector. But just so we make no mistake: this Scheme will help some charities claim back a few thousand pounds each year; it won’t plug the gaps left in sector finances by spending cuts (£1.2bn) or the tax cap (£500m), particularly these will likely impact on different charities.

The real risk with the Scheme is this: it’s a gift wrapped in shiny new red tape. The consultation proposes a hugely onerous series of restrictions, redefinitions, and requires matching with Gift Aid claims. This is unnecessary.

Charities already have to register with HMRC for Gift Aid. Surely it needn’t be so difficult to sign-up for this new Scheme, and could be managed as part of the existing registration process, with new guidance to go alongside. We recognise HMRC’s due concern to reduce fraud risks – but we think these risks can be dealt with more proportionately and by relying on existing regulatory concepts such as the ‘fit and proper persons test’.

All hope is not lost. We believe that HMRC can do justice to their original policy aim of reducing Gift Aid bureaucracy, while safeguarding taxpayers’ interests, if they take on board our recommendations and those of others in the sector.  We stand ready to provide further assistance.

As always, we welcome any views on our policy blog.

NCVO Policy Team’s blog

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Charlotte Ravenscroft was NCVO’s head of policy and public services. Charlotte’s wrote about funding, public service delivery, and strengthening the evidence base for voluntary action. She has also worked at The National Lottery Community Fund and the Department for Education.

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