Church charities have missed out on £16m of funding under the Gift Aid Small Donations Scheme – more than twice as much as the scheme has actually paid out – because the rules have been applied too strictly, the Charity Finance Group annual conference heard yesterday.
Ian Theodoreson, chief financial officer of the Church of England and chair of the CFG, said HM Revenue & Customs believed church charities were considered to be “connected charities” under the GASDS because they were all controlled by a single bishop, but he felt this was not a sensible interpretation of the law.
Theodoreson was speaking during a question-and-answer session with Nicky Morgan, financial secretary to the Treasury, who has responsibility for charities.
The GASDS allows charities to claim a gift aid-like relief of up to £1,250 a year on small cash donations even if they do not have the usual gift aid paperwork. But connected charities can only claim one set of relief between them.
The scheme raised only £7m in the first year. The government had estimated the scheme would be worth £55m to the charity sector in 2013/14. More claims could still be made in respect of this year but the scheme is likely to fall well below target.
The NCVO and the CFG say the rules were originally intended to benefit small charities, but are now so complex that many small charities are often unable to use them. Both organisations are lobbying for changes in the law.
Caron Bradshaw, chief executive of the CFG, said following the conference that the GASDS had fallen "well below the intended target" and that it was "crucial" that government took steps to cut red tape around the relief.
Morgan said that an HMRC charities outreach team, announced in the Budget, would consist of 15 people, and that one of their roles would be to promote the Gift Aid Small Donations Scheme.
No contingency for Scottish independence
Morgan also told the conference that there were no contingency plans to cover the effect on charities if Scotland left the union following the referendum in September.
Morgan was asked if any plans had been made for the effect of independence on issues such as gift aid on donations from Scots to UK charities, but said “the honest answer is no” because “Britain is better together”.
VAT rebates under review
Morgan also said the government was considered VAT rebates for charities which deliver public services. She said Treasury officials were assessing this, and “expected to report to the autumn statement 2014”.
“It would be extremely expensive but that’s not to say that we aren’t taking representations,” she said.
