Income Tax: Gift Aid requirements on intermediaries
Published 9 December 2015
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Who is likely to be affected
Charities and Intermediaries that collect charitable donations and do not comply with the legislation.
General description of the measure
The measure will allow HM Revenue and Customs (HMRC) to impose penalties on intermediaries if they fail to comply with requirements set out in secondary legislation.
It will ensure intermediaries operate in a correct and robust manner as they may be liable to a penalty if they fail to comply. If the intermediaries are fully compliant with the requirements then the donors and the charities are protected, because if the intermediary fails to comply the donor or the charity would be liable to pay the shortfall.
Policy objective
This measure will make it easier and safer for donors to give through an intermediary, thus supporting the government’s objective of maximising Gift Aid on eligible donations. It will guarantee intermediaries carry out all the necessary compliance obligations to ensure HMRC can fully assess the accuracy of their systems.
Background to the measure
It was announced at Budget 2013 that HM Treasury would undertake a consultation on digital giving. This consultation ran from July to September 2013, which was followed by confirmation at Budget 2014 that the government would legislate, in Finance Act 2015, to allow a greater role for intermediaries. This legislation was introduced in Finance Act 2015 and the government is now amending the primary legislation so the regulations can include penalties.
A technical consultation on the draft regulations will be published early next year. Detailed regulations will then be laid later next year.
Detailed proposal
Operative date
The primary legislation will take effect on the date the detailed regulations are laid. These regulations will set out the detailed operating models for intermediaries.
Current law
The current legislation covering intermediaries is found in sections 416 and 428 of Income Tax Act (ITA) 2007. This legislation was introduced in Finance Act 2015, however the legislation will not be activated until the regulations have been implemented.
Proposed revisions
Legislation will be introduced in Finance Bill 2016 to:
- allow HMRC to impose penalties on the intermediary sector if they fail to comply with requirements set out in secondary legislation
- amend section 428 ITA 2007 so that regulations may contain provision for penalties and also confer a right of appeal against those penalties
Summary of impacts
Exchequer impact (£m)
| 2015 to 2016 | 2016 to 2017 | 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 |
|---|---|---|---|---|---|
This measure is likely to decrease net receipts due to higher level of Gift Aid on donations. The final costing will be subject to scrutiny by the Office for Budget Responsibility.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
The measure is not expected to impact on individuals or households, family formation, stability or breakdown.
Equalities impacts
There is no impact on groups with protected characteristics.
Impact on business including civil society organisations
This amendment will only affect intermediaries if they fail to comply with legislation. If intermediaries fully comply with legislation then they will not be affected by the penalty provision.
It is anticipated that intermediaries will incur one-off costs to familiarise themselves with this measure and to put systems in place to implement the change.
Estimates of the impacts on intermediaries and charities will be established once details of the measure have been finalised.
Operational impact HMRC
There are no significant costs to HMRC.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be kept under review through communication with affected taxpayer groups.
Further advice
If you have any questions about this change, please contact Chris Maudsley on Telephone: 03000 518538 or email: christopher.maudsley@hmrc.gsi.gov.uk.