Gift Aid: Declarations

HMRC announced on 24 February 2012 that it had produced new model gift aid declarations, and a new checklist of the minimum information that must be included in a declaration if a charity creates and uses its own declaration form. Organisations which use the HMRC declaration should use the new one, and organisations which need to amend their own declarations should do so as soon as possible.

Budget 2011: HM Revenue and Customs announcement 

Gift aid: Records for small donations

From April 2013 charities and community amateur sports clubs that receive small donations of £10 or less will be able to apply for a Gift Aid style repayment without the need to obtain Gift Aid declarations for those donations.

The amount of small donations on which the new repayment can be claimed will be capped at £5000 per year, per charity. In order to qualify for this new repayment, charities will need to have been recognised by HMRC for Gift Aid purposes for at least three years, have been operating Gift Aid successfully throughout that time and have a good tax compliance record.

The Government will be consulting with charity representatives on the details of the new scheme over the summer of 2011.

For more information, go to: www.hmrc.gov.uk/charities/gift_aid/reclaim.htm

When looking at the sustainability of your organisation consideration must be given to the structure of your group and what would best enable it to function smoothly. A forthcoming development is the creation of the Charitable Incorporated Organisation.

What is it? 

It is a new corporate structure for charities which provides some of the benefits of being a company but without some of the burdens.

When will it be available?

Watch this space, as soon as we know we will tell you. It was originally announced in the Charities Act 2006 and the latest indication is that it will be available Autumn 2011.

Is it a good idea?

With the Big Society agenda and its emphasis on localism paving the way for organisations to increasingly consider entering into contracts for delivery of services it is sensible that those organisations seek the protection of limited liability.

How did we cope before?

The usual method of achieving such protection has been to incorporate as a company limited by guarantee and then register as a charity. But this has resulted in dual regulation with accounts and reports needing to be sent to both Companies House and the Charity Commission.

So what are the benefits of the CIO?

• The CIO means a reduced regulatory burden. There will be two alternative model constitutions; the “foundation” model will cater for CIOs that want only members to be charity trustees, while the “association” model will be available for those that require a wider membership.
• A charity trustee will be required to exercise only such care and skill as is reasonable in the circumstances, having regard to their particular skill set and experience.
• A CIO can enter into contracts in its own right and its trustees will normally have limited or no liability for the debts of the CIO.
• Small charities with incomes of less than £5000 a year may find becoming a CIO advantageous because by becoming a CIO they will have to register with the Commission. Previously, any such application would only be considered in exceptional circumstances since there is no legal requirement for registration.

What will CIOs have to do?

All CIOs will have to submit an annual return and accounts, keep registers of members and trustees.

A CIO will have to have a registered principal office situated in England or Wales.

Insolvency Law will apply to CIOs.

A CIO must have a constitution in the form specified by regulations made by the Commission or as near to that form as the circumstances allow (Foundation or Association models).

For further information go to: 

www.charity-commission.gov.uk/Start_up_a_charity/Do_I_need_to_register/default.aspx

The latest indicated timescale for implementation is March/April 2012. 

Initially it was suggested that groups with an income of less than £5000 could benefit from registration with the Charity Commission by becoming a CIO. However the Charity Commission has recently stated that it will not be able to consider applications from groups with incomes of less than £5000. At this stage and without further information this appears to be a matter of available resources at the Charity Commission.