Speaking at the Institute of Fundraising's policy forum on Gift Aid held in London yesterday, Simon Galloway, a policy manager at HMRC, predicted that radical suggestions on altering the system could lead to "tensions" in the consultation process, which is expected to open next month.
"HMRC is in listening mode, and we will not pre-judge, but there are two competing strands to this debate," he said. "Radical suggestions such as altering Gift Aid from a tax rebate to a form of Government spending will compete with suggestions such as altering how Gift Aid relates to tax paid. That's quite a wish list that could lead to tension."
Galloway's comments came as the institute's forum put together a list of nine suggestions for improving the current system. Suggestions included allowing charities access to HMRC's register of tax payers to allow them to merge their databases, and charities being permitted to recover Gift Aid at a single "composite rate", rather than at both basic and higher rates of income tax.
The Treasury's consultation on improving Gift Aid take up was announced by Chancellor Gordon Brown in March's budget.
The discussion follows the institute’s call last month to uncouple Gift Aid from the basic rate of tax. The institute wrote to Gordon Brown asking him to consider the suggestion to allow charities to continue to claim 28p in the pound from eligible donations after the cut in the basic rate of income tax next year.