Treasury proposals to reform the Gift Aid declaration are complex and bureaucratic, and they need to be simplified, delegates at the Charity Finance Group tax conference heard yesterday.
In a consultation called Gift and Digital Giving, which closes on 20 September, the Treasury proposed a shorter Gift Aid declaration, but also suggested shifting responsibility for repaying over-claimed Gift Aid from the donor to the charity, but only for amounts under a yet-to-be-agreed threshold of between £1,000 and £5,000.
But Nick Aldridge, chief executive of the PayPal Giving Fund, told delegates that the proposed changes had so many disadvantages and complexities that he was not sure they would help.
Aldridge said that the new model Gift Aid declaration was 52 words instead of 111, but it contained a line that said: "I understand HMRC will check and may tell the charity if I had not paid enough tax".
He said the idea of HM Revenue & Customs divulging tax affairs to third parties would be so off-putting to donors that "many of us think that this would negate the benefit of the shorter declaration".
He said a two-tier approach would mean that major donors would need to sign a different Gift Aid declaration from other donors, but charities would not necessarily know which form to get a donor to sign.
"This is all slightly unattractive," he said. "We think HMRC should simplify its approach."
Daniel Fluskey, head of policy at the Institute of Fundraising, said that negotiations with HMRC had not been easy and that HMRC had raised a number of objections.
"We found there are costs and complications and barriers and caveats and problems and obstacles," he said. "Our aim is to increase uptake, but we’re getting a slightly more complex, burdensome and bureaucratic process.
"Gift Aid works best when it’s simple, and things such as thresholds and two tiers of declaration don’t make it more likely that a donor will engage.
"We think the more references to HMRC and tax there are in a declaration, the more confusing it is."
Fluskey said the Institute of Fundraising needed to collect more evidence from donors to see whether they understood Gift Aid statements at the moment.
"A lot of what we hear from HMRC is assumption," he said. "They say ‘we need this statement so donors can understand what’s going on', but it’s actually been decided by four civil servants sitting in a room in a basement with little natural light. We don’t know whether donors do actually understand.
"We think we should be getting donors and fundraisers to look at what should be in a declaration."