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Gift Aid record keeping and audit requirements

Your charity or Community Amateur Sports Club (CASC) must keep records of donations received, the Gift Aid declarations relating to those donations - including any that are cancelled - and records of any benefits you have given in return for donations.

You must be able to show that your Gift Aid repayment claims are accurate and that all the conditions of Gift Aid are met - for example, that donations are for gifts of money and that the value of any benefits given in return are within certain limits. The records must also provide an audit trail linking each donation to an identifiable donor who has given a valid Gift Aid declaration.

If you don’t keep adequate records you may be required to pay back any tax reclaimed, with interest. You may also be liable to a penalty under the rules of Self Assessment.

On this page:

Gift Aid declarations

Before your charity or CASC can claim tax on a donation made by an individual you need to:

  • obtain a Gift Aid declaration from that donor to confirm that they want you to claim tax back for the donations specified
  • advise them that they will need to pay at least as much UK tax in the tax year in which they donate as the amount your charity or CASC will reclaim on their donation(s)

There is no set design for a Gift Aid declaration, however, by law any Gift Aid declaration you obtain - whether written or verbal - must contain certain information such as the full name and home address of the donor.

You must also keep a record of declarations that have been cancelled by the donor - including the date the cancellation takes effect.

Gift Aid declarations - what information to include

Format and storage of Gift Aid declarations

Your charity or CASC can decide how best to store your Gift Aid declarations, but your records must clearly show that each donor included in your repayment claim has made a declaration.

Declarations must be made available for review if required by HM Revenue & Customs (HMRC).

Paper declarations can be kept in their original format. Or they can be scanned and stored electronically, as long as the records can be searched and individual declarations located as required. If you keep scanned copies which are fully auditable you can destroy the originals.

Transcription onto a separate list or database is not an acceptable alternative to keeping the original declarations, or scanned copies.

Records of donors who have made a declaration electronically, for example on a website, can be stored on a database.

If you use verbal declarations you could audio-record these in full at the time they are made. If you don’t do this your charity or CASC must confirm the declaration in writing to the donor and be able to provide evidence of this correspondence.

If records are kept on computer, it is advisable to make regular back-ups and store them in more than one location.

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Records of cash donations

Linking cash donations to Gift Aid declarations needs care. If your charity or CASC receives regular cash donations from donors, for example in church collections, you might want to consider using an envelope scheme. This is where you can collect cash donations in envelopes so that they can show an audit trail linking the donation to the donor.

For one-off donations, your charity or CASC may choose to pre-print the Gift Aid declaration on the envelope for completion by the donor. If the donor is a regular supporter, your charity or CASC may already hold their Gift Aid declaration, in which case the envelope needs to show either the donor’s name or a unique identifier such as a reference number which can be cross-referenced to a donor register.

When the envelope is opened and the contents are counted, an official from your charity or CASC should record the amount on the envelope it came in, and in a donor record. You should keep the envelopes as part of your normal record keeping.

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Records of benefits given to donors

You can give donors modest tokens of appreciation - called benefits - in order to acknowledge their gift, but there are strict limits on their value. Your charity or CASC should keep records of all benefits given in return for donations received and show how these relate to specific donors (individuals or companies). You should also keep a record of the value of the benefits you provide, including how you arrived at the value.

Find out more about providing benefits in return for donations

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How long should you keep records?

The time limits for keeping Gift Aid declarations and Gift Aid payment records are different and depend on how your charity or CASC is treated for tax purposes. All CASCs and most charities will be treated as companies for tax purposes. You will only be treated as a trust if your charity was set up by a trust deed or a will.

Most charities and CASCs

If your charity is run as a charitable company - which most are - or you’re a CASC, you must keep your tax records (including Gift Aid declarations and records) until the later of:

  • six years after the end of the accounting period they relate to
  • 12 months after you make your Gift Aid repayment claim for that accounting period

For example if a charitable company prepares its accounts to 31 December 2007 and makes a Gift Aid repayment claim for that period during 2008, it must keep the records until at least 31 December 2013. But if the charity waits until 2013 to make its repayment claim, it must keep the records until at least 31 December 2014.

If HMRC asks you questions about your tax return or repayment claim, you'll need to keep the records until the enquiries are finished.

A single Gift Aid declaration may apply to more than one donation, so you’ll need to work out when the last gift specified on a particular declaration is received, and keep the declaration long enough to satisfy the rules set out above.

If you have any enduring Gift Aid declarations covering ongoing donations you’ll need to keep them permanently.

Charitable trusts

As a general rule we recommend that you should keep your tax records (including Gift Aid declarations and records) until the later of:

  • six years after the end of the tax year they relate to, and
  • 12 months after you make your Gift Aid repayment claim for that tax year

If you are asked to make a tax return there are different rules about how long you must keep records for. For more information, see link below.

If HMRC asks you questions about your tax return or repayment claim, you'll need to keep the records until the enquiries are finished.

A single Gift Aid declaration may apply to more than one donation, so you’ll need to work out when the last gift specified on a particular declaration is received, and keep the declaration long enough to satisfy the rules set out above.

If you have any enduring Gift Aid declarations covering ongoing donations you’ll need to keep them permanently.

Record keeping if you’re a charitable trust

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HMRC Gift Aid audits

HMRC makes limited checks before making any Gift Aid repayments. It selects a number of charities and CASCs for audit to ensure that the scheme is being used properly and that any repayment claims made are accurate. If your repayment claim is selected for a review, it does not necessarily mean that HMRC believes the claim is wrong or that there is suspicion about anything to do with the claim or your charity or CASC.

HMRC wants to help you to get things right and will help your charity or CASC to make further repayment claims if it is found that less tax has been claimed than was due.

The audit procedure

If your charity or CASC is selected for audit, a member of the audit team will contact you at least four weeks in advance to arrange a convenient date and venue for the audit.

The main part of any audit is a detailed review of the documentation associated with a claim, including Gift Aid declarations and banking records. You will be advised in advance about:

  • the records that the auditor will need to see during the visit
  • whether the auditor will review all of the records supporting a claim or just a sample

HMRC will need to be satisfied that your records properly support your tax repayment claims. The review will look at whether:

  • the tax repayment forms were properly completed from your charity’s records
  • there are valid Gift Aid declarations held for all donations on which a Gift Aid tax repayment is claimed
  • the donations meet the Gift Aid requirements
  • any benefits provided for Gift Aid donors are within the allowed limits
  • an audit trail exists to link tax repayment claims to individual donations and to Gift Aid declarations
  • the amount repaid has been received by your charity and paid into the charity’s bank account

What happens if HMRC finds errors?

On the day the audit ends, the auditor will talk to you about exactly what has been reviewed and what was found. The same information will then be included in a letter summarising the audit findings and what action your charity or CASC may need to take.

If less tax has been claimed than was due, HMRC will help you to make a further repayment claim.

If the auditor can’t validate a tax repayment claim and, as a result, you have been paid too much tax, the problem will be explained to you as well as an explanation of the formal process that needs to be followed in order to recover the tax involved. HMRC will then:

  • provide a summary of the amounts of overpaid tax for all relevant years
  • provide a printout of all interest due, up to a projected settlement date
  • where appropriate, discuss the basis for any penalties that may be due
  • offer to negotiate a settlement in writing which, when accepted by HMRC, would act as a binding agreement
  • discuss any payment difficulties - where appropriate HMRC can agree an installment programme but the effect of interest means that this is likely to increase the total amount payable

Read more about the audit process in the detailed guidance notes

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Contacting the HMRC Charities Helpline

For more help you can contact the Charities Helpline on Tel 0845 302 0203 (open from 8.00 am to 5.00 pm, Monday to Friday). Select option 6 for Gift Aid.

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More useful links

Read more about keeping Gift Aid records in the detailed guidance notes

How to reclaim tax on Gift Aid and other income

Order a copy of the Gift Aid Toolkit on CD-ROM

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