VAT model 'would simplify Gift Aid'

Gift Aid could be simplified by amending it to work like the VAT system for small businesses, a leading academic has suggested.

This would involve HM Revenue & Customs sending charities cheques based on a proportion of their voluntary income, rather than requiring them to keep detailed paper trails, said Adrian Sargeant, professor of fundraising at Indiana University and Bristol Business School.

"Rather than filling in a lengthy tax return for my consultancy work, I can tell HMRC my turnover and it just sends me a VAT bill for 12 per cent, based on the average paid by businesses in the sector I work in," he told Third Sector. "A similar system for Gift Aid would dramatically cut charities' workloads."

For the system to work, HMRC would have to calculate the average proportion of donations eligible for Gift Aid in different cause areas, Sargeant added.

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