3.36.1 In order to operate the Gift Aid scheme, charities need to keep records to show how much has been received from each donor who has made a declaration. Charities must keep sufficient records to show that their tax reclaims are accurate. In other words, they must keep records that enable them to show:
3.36.2 If a charity does not keep adequate records it may be required to pay back to HM Revenue & Customs (HMRC) the tax reclaimed, with interest. It may also be liable to a penalty under the Self Assessment rules.
3.37.1 The form of records to be kept is not prescribed in the legislation. In practice, it will depend on the size of the charity, the number of donors and the kind of systems used.
3.37.2 When HMRC audit a repayment claim, the auditor will normally review a sample of the donations on which a charity is claiming Gift Aid. For smaller charities all donations may be looked at. For each donation reviewed, the auditor will ask to see:
HMRC will accept that a written confirmation has been issued where the charity can show a standard letter template in an acceptable format and a list of the donors to whom the letter was sent.
In the case of recorded oral declarations the auditor will ask to listen to the recording of the declaration.
3.38.1 The charity does not have to keep records on paper. They may be held on the hard drive of a computer, floppy disc or CD-ROM, or stored on microfiche. If records are kept on computer, it is advisable to make regular back-ups and store these in a different location to the computer. Further details on the procedures to follow when transferring original records onto microfiche or an electronic medium can be found in section 7.4 in Chapter 7 below.
3.39.1 The time limits for keeping Gift Aid records depend on how the charity is treated for tax purposes. Most charities will be treated as companies for tax purposes. A charity will only be a trust for tax purposes if it was set up by a trust deed or a will.
All charities will need to keep enduring Gift Aid declarations covering ongoing donations permanently. If the donations cease then the time limits below apply from the date of the last donation.
A single Gift Aid declaration may apply to more than one donation, so a charity will 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 below.
A charity run as a charitable company - which most are - must keep tax records (including Gift Aid declarations and records) until six years after the end of the accounting period they relate to.
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.
If HMRC asks the charity questions about its tax return or repayment claim, the charity will need to keep the records until the enquiries are finished.
Charitable trusts should keep tax records (including Gift Aid declarations and records) until the later of:
If the charity is asked to make a tax return there are different rules about how long records must be kept for.
If before January 2012 you followed previous guidance and destroyed records between four and six years old you will not be penalised. However if you have kept your records from that period you must continue to keep them as you may be penalised if you destroy records which you are required to keep.
If HMRC asks the charity questions about its tax return or repayment claim, the charity will need to keep the records until the enquiries are finished.
3.40.1 Charities may choose to collect cash donations in envelopes, such as church stewardship envelopes, so that they can show an audit trail linking the donation to the donor. For one-off donations, charities may choose to pre-print the Gift Aid declaration on the envelope for completion by the donor. If the donor is a regular supporter, the charity may already hold his or her Gift Aid declaration, in which case the envelope need simply contain either:
3.40.2 Where a unique identifier is used, such as a reference number,
ideally this should be unique to the donor. In practice, where envelopes
containing the same unique identifier are used by the donor and his or her
spouse
and minor children, it can assumed that all the donations are from
the donor,
unless there is evidence to the contrary.
3.40.3 When the envelope is opened and the contents are counted, an official of the charity should record the sum that it contained both:
3.40.4 Charities should retain for the period set out in section 7.3 in Chapter 7:
3.41.1 If a charity receives a donation drawn on a joint bank account, and it has not been given a Gift Aid declaration by both account holders, it will need to determine whether the donation is from the donor who has given a Gift Aid declaration. The charity may, however, assume that the donation is from the person who has made the Gift Aid declaration, even if it is authorised by the other account holder, unless it holds evidence to suggest that the donation is from that other account holder.
3.41.2 Similarly, if a credit card donation is received drawn on an account in respect of which there are joint authorised signatories, it can be assumed that the donation is from the authorised signatory who has made a Gift Aid declaration unless there is evidence to suggest that the donation is from the other authorised signatory.
3.41.3. If there is any doubt whether the donation is from the person who signs the cheque, etc. or authorises the transaction, the charity should ask them to confirm whether the donation is from them.
