Audits by HMRC Charities - putting things right
12 Can problems identified by auditors be put right?
12.1 Problems with the review process can be corrected and this may affect the error rate applied to this and other claims.
For example
At the time of an audit review a charity may be unable to locate or access Gift Aid declarations for some of the donations under review. Subsequently (and before a settlement is finalised) existing declarations may be found. If it can be shown that these records did actually exist at the time of the review then the auditor may accept that the error rate should be revised.
12.2 The error rate will not be affected by remedial action by the charity to address defects in their claim process or record keeping.
For example
During an audit a charity may find that Gift Aid declarations are missing for some of the donations under review. Obtaining new declarations from donors to cover the donations in question will not affect the error rate unless this is done for the population as a whole.
12.3 Where errors have been identified and a settlement has been concluded on that basis, it may be possible for the charity to make new claims.
For example
During an audit a charity may find that Gift Aid declarations are missing for some of the donations under review. The charity may review some or all of its records and identify donations for which no valid Gift Aid declaration is held. The charity may secure new declarations from donors to cover the donations in question and submit a new claim with respect to those donations.
12.4 Generally, a charity is able to claim a repayment of tax for 6 years prior to the current tax year. Such new claims are not restricted to the amount of the original estimate of the error.
13 What should a charity do to remedy identified problems?
13.1 The sampling techniques used in HMRC charity audits of tax claims provide a statistically valid estimate of the errors likely to be found in the whole population.
13.2 Outside the sample, this process does not identify all individual donations for which a claim should not be allowed.
13.3 Where records are found to be inadequate, there is a strong case for the charity to make a comprehensive review of all Gift Aid declarations held. Alternatively, a charity may decide to target certain donations only - most obviously larger ones.
13.4 Following an audit, a charity is not required to review declarations in respect of periods covered by claims that were the subject of the review - but the charity should make no further Gift Aid claims without first ensuring that all declarations are properly in place.
13.5 Charities should ensure that any problems identified are properly addressed so that they do not recur.
13.6 We are happy to work with charities to improve systems for processing donations and maintaining records.
