Voluntary sector umbrella bodies have agreed with the National Audit Office that more must be done to improve the evidence base around Gift Aid.
The spending watchdog’s report, Gift Aid and Reliefs on Donations, published today, highlights the shortcomings in data and evidence relating to Gift Aid, its uptake and what effect it has had on charitable giving.
The report says that almost 10 per cent of the tax relief paid on charity donations to both charities and donors last year could have been claimed through tax abuse or error.
Jane Tully, head of policy and public affairs at the Charity Finance Group, said she was concerned that there was not a good understanding of how many more charities and individuals might be able to take advantage of Gift Aid, and how HM Revenue & Customs assessed the scheme.
"We know that the number of registered charities in the UK is far in excess of the numbers registered with HMRC," she said. "HMRC needs to consider Gift Aid within the context of the wider charity market, not only those already registered with it, and we are happy to assist with this."
She said that the CFG viewed Gift Aid fraud as fraud against the sector and said "it undermines the use and principle of these important tax reliefs on income used for charitable purposes".
But she said that any measures taken in response to the findings must be proportionate to risk and targeted. "Additional hurdles put in claiming processes to disincentivise abuse disproportionately affect take-up and value for money for smaller charities," she said.
In response to the report, Sir Stephen Bubb, head of the chief executives body Acevo, said: "We agree with the report's conclusion that government needs to work harder with the voluntary and community sector to improve its evidence base, and Acevo will work with HMRC to ensure that Gift Aid continues to deliver value for the sector and the taxpayer."
Charlotte Ravenscroft, head of policy and research at the National Council for Voluntary Organisations, said she agreed with the NAO’s recommendation that HMRC should establish clearer objectives around the take-up of Gift Aid, and she said more must be done to ensure all charities could access the scheme.
She said it was important that HMRC acted on the recommendations in the NAO report, particularly those about sharing more information with the Charity Commission.
A spokesman for the Institute of Fundraising said: "The further evidence and data that the NAO has recommended HMRC and the Treasury collect could also prove give all stakeholders a greater understanding of how Gift Aid works in practice and allow them to assess how it can deliver the best possible value to charities in the future.
"In challenging times, the support that Gift Aid provides charities is more important than ever – this is a good opportunity to work with government to get the more in-depth evidence of the role Gift Aid plays in incentivising giving."