Gift Aid developments
HMRC has issued guidance that confirms that Gift Aid can be claimed on waived refunds and loan repayments, provided that the agreement to waive the amount owed is clear and irrevocable, and that a record of the waiver is held by the charity. This makes permanent a temporary concession that was introduced at the start of the COVID-19 pandemic in response to the large number of cancelled events, to unlock valuable tax reliefs at a time when charity cash flows were under significant strain. Previously a waiver of debt did not qualify for Gift Aid as it was not considered to be payment of a sum of money.
The evidence of the waiver that needs to be retained by the charity will depend upon the amount being waived. For nominal amounts, such as the amount paid for a couple of tickets for a cancelled event, this could be an email exchange, a recorded telephone call or other correspondence. For larger amounts
HMRC would expect there to be a legally enforceable document to be in place, that would confirm what is being waived and that it should be treated as a donation for Gift Aid purposes.
Note that the donation will be considered to have been made at the date of the waiver, not of the original payment, and a Gift Aid declaration will need to be obtained if one is not already held for the donor.
HMRC has also agreed a series of pragmatic concessions to the Retail Gift Aid scheme with the Charity Tax Group, where it has not been possible to fully comply with the requirements to the scheme whilst their offices and shops have been closed during the pandemic. These relate to the issue of end of year letters, the treatment of returned mail, oral Gift Aid declarations, staff and volunteer training and the operation of Gift Aid audits. As charities return to normal operations they are expected to revert to full compliance with the requirements of the scheme.