HM Revenue & Customs (HMRC) has updated its guidance for charities selected for a Gift Aid Scheme audit.
HMRC selects a number of charities and community amateur sports clubs (CASCs) for audit to ensure that the Gift Aid Scheme is being used properly and that repayment claims made are accurate, with organisations chosen on both a risk basis and at random.
The revised guidance, published on 12 May, covers topics including:
- what the audit involves
- what auditors are looking for, including risks, e.g. whether donors who have provided Gift Aid declarations have paid the right amount of tax to cover Gift Aid claimed and tax compliance on other issues, such as VAT and PAYE
- putting right any problems identified.
The guidance also highlights HMRC’s option of issuing a yellow card warning for earlier years than the period under review, rather than seeking to recover tax due for those years.
The charity and HMRC must both agree the yellow card and the charity must also commit to take any action HMRC thinks necessary to improve their record keeping. If agreement cannot be reached, HMRC will recover tax for both the current and earlier years.
More Thompson’s charity specialists can provide expert advice to charities and CASCs to ensure their Gift Aid Scheme administration is in order, to avoid any incorrect claims and the issuing of a yellow card. For more information on how we can assist, please contact us.