Gift Aid Income

Gift Aid risk areas

Following adaptations to working practices, donation sources, fundraising activities and personnel as a result of the pandemic, it would be easy to overlook the impact on the appropriate processes for Gift Aid claims.

If your organisation is in receipt of Gift Aid, now is a good time to step back and review whether or not it is being claimed appropriately, and to take steps to mitigate new risks and benefit from new opportunities.

Here are a few areas you may wish to consider:

• Is your charity receiving Gift Aid income from any new sources, such as new electronic platforms or new types of fundraising activities?
• Have you conducted a recent review of processes, which follows the Gift Aid process from first contact with the donor through to receipt of claims to provide assurance that Gift Aid is being claimed appropriately? Do you have an approach in place to monitor that the process is being operated correctly?
• Are all volunteers and staff members who interact with the Gift Aid process adequately trained to recognise issues and advise donors on when Gift Aid donations can be made? Can you provide evidence that this takes place in the event of a challenge from Her Majesty’s Revenue & Customs (‘HMRC’)?
• Is the organisation confident from a governance perspective that the systems in place ensure that correct Gift Aid claims are being made? It should be noted that where Gift Aid volumes are large, a slight error in the process can cause a significant over/under claim very quickly.

What are the risks in getting it wrong?

• Over-claiming Gift Aid can result in penalties and fines along with repayment of the over-claimed amounts.
• Not recognising or claiming Gift Aid when appropriate can lead to a loss of revenue for the charity, thereby meaning less funds are available for furthering the charitable work of the organisation. 
• Good governance of Gift Aid is expected as part of your charity’s tax management strategy and this includes appropriate oversight of claims.  
• Risk to the reputation of the charity if things go wrong. 

What should you do now?

1. Firstly, review the above to determine whether there are any potential risk areas.
2. Where potential gaps or risk areas are identified, undertake timely measures to train personnel, review processes and update procedures and governance to support correct gift aid income recognition.
3. If any errors are identified, corrective steps and appropriate notification to HMRC should be made.