Changes to audit process 'affecting use of Gift Aid'

The Charity Finance Directors' Group has strongly criticised the auditing procedures of HM Revenue & Customs in its submission to the government consultation on Gift Aid.

The consultation, which closed on Sunday, was an opportunity for organisations across the sector to suggest to HM Treasury how it could increase the uptake of charitable tax relief.

The CFDG response claimed that the changes in audit protocol introduced towards the end of 2004 meant that the process was "not a helpful or positive experience" for organisations under scrutiny and had a "very negative impact on charities' desire to claim Gift Aid at all".

The submission added: "The usefulness of the audit does seem to be dependent on the HMRC inspector. One of our members has had such an unpleasant audit experience that they outsourced the management of their Gift Aid."

The umbrella body also complained that HMRC personnel and associated agencies had given "inconsistent advice" and suggested that charities should have more regular contact with the organisation between audits.

The CFDG is one of six sector bodies that have together made a bold proposal to simplify the Gift Aid system (Third Sector Online, 1 October). The group, which also includes the Charity Tax Group, the NCVO, Acevo, the Institute of Fundraising and the National Church Institutions, suggested that each charity should have a flat reclaim rate for Gift Aid based on the amount of voluntary income it receives.

HMRC said it had no comment to make.

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