Editorial: Just one pair of braces is enough

The government would do well to scale down its precautions over the Gift Aid Small Donations Scheme, says Stephen Cook

Stephen Cook, editor
Stephen Cook, editor
You can often predict which Third Sector news stories will attract the most readers. A case in point was the one about HM Revenue & Customs telling a Commons select committee it had thwarted a fraudster who tried to set up 189 bogus charities to claim Gift Aid. It was the week’s best-read story.

Fraud arouses a queasy fascination in the charity world. There’s a reluctance to talk about it, or even admit that it happens, for fear that it will tarnish the image and put people off donating. But there’s also fierce interest, perhaps because of a terror that it might occur in one’s own organisation.

Every so often there’s a horror story in the courts, as when the tax adviser Roy Faichney was jailed for four years last week for a share donations scam. And for every misdeed prosecuted, how many go undetected?

HMRC is generally coy about methods of fraud, presumably because it doesn’t want to give anyone ideas. But every so often it slips a figure out, such as the one above or the £20m in fraudulent claims it says it has thwarted in the past two years. The amount of tax relief successfully claimed by fraudsters is the vital, but probably unknowable, figure: one estimate that circulates is between £60m and £100m of about £3bn of annual tax reliefs, most of it involving the £1bn of Gift Aid.

Hence the current battle in parliament about safeguards for the Gift Aid Small Donations Scheme, which offers Gift Aid-style payments of up to £1,250 without the need for paperwork. HMRC is insisting on a belt and braces approach. It says applicants must have claimed Gift Aid on paper for three of the previous seven years, and in any year must claim £1 under regular Gift Aid for every £2 under the new scheme. But it has also got an extra pair of braces in the form of the existing ‘fit and proper person’ test.

Isn’t this a case of one support system too many? Many people feel that charity tax breaks are like blood in the water and need an effective shark net around them. But unless the conditions for this scheme are relaxed somewhat, there’s a danger it will be too restrictive to be of use to intended beneficiaries.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Already registered?
Sign in
RSS Feed

Third Sector Insight

Sponsored webcasts, surveys and expert reports from Third Sector partners

Third Sector Logo

Get our bulletins. Read more articles. Join a growing community of Third Sector professionals

Register now