HMRC confirms charities can claim Gift Aid on tickets sold for cancelled events

Charities can claim Gift Aid on tickets sold to cancelled events if supporters decide against asking for refunds, HM Revenue & Customs has confirmed.

The guidance comes as thousands of charities face having to refund customers due to attend events cancelled in the wake of social distancing measures imposed to stop the spread of Covid-19.

The Charity Tax Group wrote to the Chancellor of the Exchequer, Rishi Sunak, last month to request that charities be allowed to retain Gift Aid for any payments originally made for events that have now been cancelled, among other measures to help ease the financial burden on charities caused by Covid-19.

HMRC’s new guidance says that if the virus leads to the cancellation of an event and a person due a refund decides to donate this to the charity, the charity can keep it as a donation.

This is providing the charity has an audit trail showing the individual agreed to treating the refund as a donation, that the donor did not receive a benefit as a result of their donation and they completed a Gift Aid declaration.

The charity no longer has to physically refund the ticket price for the person to redonate, the guidance says.

Postponed events will not be included in the temporary measures outlined in the guidance, HMRC said.

HMRC also included a process for charities to follow to get the donation, starting with informing the person that they are entitled to a refund but might wish to donate the cost of the ticket to the charity, and making it clear this is optional but non-refundable if they choose to do so.

Charities must then make sure that person has enough tax to cover the donation, document and keep records of the conversation, and ensure a Gift Aid declaration is in place for the person.

John Hemming, chairman of the Charity Tax Group, said: “This was a leading proposal in a recent CTG letter to the Chancellor and is a practical solution to unlock important tax reliefs for charities at a time when cash flow is under serious strain.

“CTG is grateful to HMRC officials for agreeing to implement this concession in a simple format that will be easy for charities and donors to follow.”

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