Charities: New Beginnings - Summer 2013

FOREWORD By Adrian Wild We have entitled this briefing 'new beginnings', in recognition that we have a new system for Gift Aid claims, as well as the long awaited new accounting standard for the UK. (I won't say that this was eagerly awaited - I think that most people consider that this standard is a bit like a trip to the dentist: not something to look forward to but hopefully not as a bad as feared). However, the new Gift Aid system is genuinely helpful to charities; payments are faster and submissions can be made electronically. At last, it seems as though HMRC are moving in the right direction and using the connectivity that the internet offers to help.

We also have a fairly technical article about recognising when a charity is trading. This is an important area as it has implications for both VAT and direct taxes - get it wrong and it could cost you serious money. In the case considered, the charity has - for now - prevailed. However, there are a number of charities which operate in a very similar manner and if HMRC succeed in their appeal, then these charities will need to consider mitigating action.

Finally, now that the school year is over, we offer some food for thought on what makes an independent school financially viable.

I hope you enjoy this issue and also have a good summer.


Getting online will make tax repayment claims for charities much easier.

HMRC has now made it easier for charities and community amateur sports clubs to make tax repayment claims, by introducing their new online service via the Government Gateway website.

The options There are now three options available to charities, although option one will be the typical choice for most charities.

Option one: claim online Using the Government Gateway, charities can sign up for the new online service and submit claims for up to 1,000 Gift Aid donors, and up to 200 items of other income at any one time.

Such claims can be submitted as often as required and can be made by third party agents on behalf of their clients.

Option two: claim through own database This option is aimed at large charities who regularly need to claim for more than 1,000 donors.

Using their own developed, compatible software, or a third party package, charities will be able to submit claims of up to 500,000 Gift Aid donors per day.

Option three: paper submission It will still be possible for those without access to the internet to submit paper forms. The old R68 claim form has been replaced with a new version, form ChR1 and is available to order from the HMRC Charities Helpline (0845 302 0203).

The new design of the form should enable HMRC to process claims more quickly than previous paper submissions.

Claiming online The claims are prepared on screen and specially formatted spreadsheets, detailing the donations, are uploaded during the process.

The information required for each gift is the same standard details required on any Gift Aid declaration including: full name; address (particularly the postcode); date of gift and value. Charities that have their own electronic records will be able to copy information directly into the spreadsheets.

Once uploaded, the information is validated and summarised on screen immediately. Errors or missing data are automatically highlighted and the claim cannot continue until everything is completed.

Claims can be part-prepared and saved for later submission. They will be available to retrieve for 30 days.

Donations can be aggregated up to £1,000, and claims under the Gift Aid Small Donations Scheme can be included. Likewise, any previous over-claimed amounts can be adjusted using the new system.

Benefits Faster Under the new system, HMRC aims to process each claim within 15 working days, whether submitted online or on paper. This compares to a timeframe of 30 working days for the old R68 claims.

Stronger The checks in place during the claim process highlight any omissions or errors and will ensure that submissions are accurate. This should prevent unnecessary delays caused by the return of incomplete forms.

Successful submissions will be acknowledged and a further confirmation will be received when the repayment is sent, allowing charities to keep track of their applications.

Better HMRC has aimed to make the system easier to understand by simplifying names and descriptions. In depth...

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