HMRC draws up new Gift Aid rules for one-off donations

Plus: Financial distress is a bigger factor in charity mergers than clear-headed planning; Police investigate alleged fraud at Age UK South Tyneside

HM Revenue & Customs has drawn up a new, simplified Gift Aid declaration for one-off donations, which charities and community amateur sports clubs must begin using by April next year. The revised wording includes a new line warning people that if they pay less tax in a year than the amount of Gift Aid claimed on all of their donations, it is their responsibility to pay the difference. Andrew O'Brien, head of policy at the Charity Finance Group, said he was concerned that the benefits of the simplified wording might be outweighed by the warning about donors having to pay for any shortfall. The Charity Tax Group warned that the new warning could have a "chilling effect on some donors" but said it recognised the importance of Gift Aid being operated correctly. HMRC has also published new guidance on Gift Aid claimed on goods sold in charity shops. Under the new guidance, charities will no longer have automatic liability to repay money if it turns out that a donor has not paid enough tax to qualify as a Gift Aid donor. The responsibility for repayment is thus passed to the donor.

Financial distress is a bigger factor in charity mergers than clear-headed planning, according to a new report, The Good Merger Index, published by the management consultancy Eastside Primetimers. It analysed 45 of 61 charity and social enterprise mergers involving 89 organisations, mainly in England and Wales, that took place in the 12 months to 30 April this year. It said that slightly more than half of the organisations involved in deals in which they became part of another organisation or merged with an organisation of roughly the same size had made a loss in the most recent financial year before the merger, compared with 24 per cent of acquiring charities.

Police are investigating allegations of fraud at Age UK South Tyneside after a member of staff was suspended. A spokeswoman for the South Shields-based charity, which employs 38 people, said: "A member of staff has been suspended after some concerns have been raised. As this is an ongoing investigation, we are unable to comment further." A spokesman for Northumbria Police said: "We are aware of concerns about allegations of fraud. We are carrying out an inquiry to establish if any criminal activity has taken place." The Charity Commission confirmed that it had been in contact with the charity about the issue.

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