In a consultation on Gift Aid and intermediaries, which was launched in August and closed yesterday, HMRC put forward a raft of measures to simplify the process of securing Gift Aid declarations from charity donors using online giving platforms.
One of the proposals is that annual statements of donations made during a tax year would be sent to any donor who gave £5 or more that year and who gave money to more than one charity through the intermediary.
But the CFG said the annual statement could confuse donors, be seen as "hassle" by many people and could "reduce their propensity to Gift-Aid their donations".
The CFG’s consultation response says: "We believe that this new statement will confuse donors, runs counter to the existing direction of travel to reduce unsolicited communications to donors, separates Gift Aid from the donation and could lead to more negative views around Gift Aid.
"Given that there is no evidence or clear rationale as to why this statement would inform donors better about Gift Aid, this is a significant risk for no clear gain."
The CFG response instead advocates a system under which donors have the right to access an account where all their donations, Gift Aid claims and information about claiming higher-rate relief could be held.
It says this alternative policy would give donors access to information while also working within existing infrastructure provided by many online intermediaries, and should be complemented by a public awareness-raising exercise about Gift Aid.
The Charity Tax Group’s response to HMRC’s consultation also raises concerns about the introduction of an annual statement, saying that although increasing donors’ understanding of Gift Aid was welcome, "we still have reservations about whether the introduction of a mandatory annual statement is the most effective way of achieving these goals".
The CTG response says that requiring donors to provide authorisation for Gift Aid each tax year could lead to reduced Gift Aid take-up year on-year.
It instead says a system of "passive authorisation", where the donor is treated as eligible for Gift Aid unless they say otherwise, would be preferable.
Both organisations say the annual statement threshold should be increased from £5, with the CTG saying it should increase to £20 and the CFG recommending £120.
The CFG’s consultation response makes other criticisms of HMRC’s proposals and says it is concerned the consultation has not supported text giving, which it says has one of the lowest Gift Aid claim rates.
In comparison, the consultation response says that online intermediaries have high Gift Aid claim rates of more than 80 per cent in most cases, which it says means the changes proposed "are unlikely to have a significant impact on Gift Aid claim rates".
The CFG response says that HMRC should investigate whether to take a greater role in regulating intermediaries.