Small charity to sell property after it mistakenly over-claimed Gift Aid

Sarah Cornelius-Price, president of the Joshua Foundation, says it had waived its claims for the past four years to help pay off the debt to HMRC

Sarah Cornelius-Price
Sarah Cornelius-Price

A small charity is planning to sell a property it owns in a bid to clear a debt of more than £350,000 to HM Revenue & Customs after it over-claimed on Gift Aid.

The Joshua Foundation, which provides holidays for children with life-threatening conditions and had an income of £428,000 in the financial year to September 2011, mistakenly over-claimed Gift Aid worth £426,000 over a period of seven years.

The claims were connected with the charity’s flagship Oz Experience programme, which provides trips to Australia for sick children and raises funds for the foundation.

The debt has been on the charity’s books since 2003 and, according to its latest accounts to September 2011, the foundation still owes HMRC £356,789.

Sarah Cornelius-Price, president of the foundation, told Third Sector that it had been waiving its Gift Aid claims of about £25,000 a year for four years to help pay off the debt.

She said the charity owned a house in Fishguard, Pembrokeshire, which it intended to sell in order to cover the outstanding debt. The house, which is in need of repairs, will be put on the market at the end January after it has taken legal advice, and this will cover the debt.

Cornelius-Price confirmed that the charity spent 58 per cent of its income on fundraising and administration in 2010/2011 and 42 per cent on its charitable activities.

Cornelius-Price and her husband were paid by the charity through a private company they jointly own, rather than as salaried staff.

"I feel we have been unfairly singled out for criticism over our fundraising ratio because there are many charities in Wales and the UK with a similar or an even lower ratio," she said.

"My husband, our fundraising director, and I were advised by the charity’s accountants that if we were paid through our own company it would result in a smaller tax bill for the charity and for ourselves. The process was transparent because, however we were paid, it would show up on the charity’s accounts."

HMRC said it could not comment on specific cases, but said in a statement: "We work with charities to help them repay funds that are wrongly claimed under Gift Aid. Enforcement action is a last resort."

The Charity Commission said it had been in contact with the charity over the outstanding debt. A spokeswoman for the commission said: "The charity continues to be in contact with HMRC in relation to the debt and plans to be able to realise some assets to reach a final settlement shortly."

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