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HMRC internal manual

Debt Management and Banking Manual

Set-offs - S130 FA2008: set-off of Gift Aid against a charity’s debts


As stated in DMBM210130, S130 FA2008 and S178 FA2016 give HMRC the power to set off amounts that are due to be repaid to a person against debts owed to HMRC by that person. The power to set off applies in England, Wales, Northern Ireland and Scotland. It enables HMRC to operate UK-wide across the whole range of debts administered by them with the exception of tax credit payments, Child Benefit payments, and Guardian’s Allowance.

A charity liable to a charge on taxable/non-exempt income or gains will be required to complete a Head of Duty (HoD) tax return, and pay their liability under Self Assessment or Company Tax, depending on whether set up as a charitable trust or a company.

If the charity has business activities PAYE and VAT rules will also apply.

When pursuing charities for outstanding debts, it may occur that normal DM campaign action does not secure payment and we need to consider taking enforcement action.

Where we have been unable to clear such debts prior to enforcement we can ask for set-offs to be made to clear our debts from claims for Gift Aid (GA) repayments the charities make.

DM and Specialist Personal Tax (SPT) Charities have processes in place to enable this set-off.


Where you identify a charity with a debt for which an arrangement cannot be negotiated and that may be ready for enforcement you may, following contact with the charity, seek to obtain a GA set-off. You should:

  1. complete and send the ‘DMPT Gift Aid Set Off’ form found in SEES Forms and Letters; the charity’s commission or GA reference can be obtained from  or for Northern Ireland by using the ‘Charity search’
  2. note “request to SPT Charities for potential GA set off” in the IDMS action history and ETMP then BF the case for 10 days on ‘For Advice’ to allow time for a response from SPT Charities and the set-off to be dealt with; Specialist PT Charities will email a response to the SPoC mailbox.

SPT Charities will review the case and provide details of any credits available, the GA reference where needed, any trustee information for later enforcement (if requested) and will confirm they have set the no repayment signal on their system.

If there is no credit available the SPoC office will:

  • note on IDMS and ETMP that no GA is currently available and that the no repayment signal has been set for the future
  • update IDMS Notes and Assets with all of the information given (this may require updating additional addresses and so on in designatory details too), making sure the GA reference is noted for the future
  • put the case on to the appropriate NAC as per the original stencil so that DM can follow existing procedures to take enforcement action.

If there is credit available the SPoC office will:

  • interrogate the appropriate systems and complete a separate SAFE Stencil, Transfer of Charity Gift Aid (in SEES) for each charge reference with details of the GA credit and how the money should be reallocated
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • note the appropriate IDMS work items and ETMP that the request has been sent to offset GA and the amount and allocation request details; a note should also be added to direct any customer queries to the appropriate office
  • notify the charity in writing that a GA set-off has been undertaken; the letter includes customer education on future compliance.

If a debt remains outstanding once the set-off has been requested, the SPOC will also ask Corporate Treasury to reset the ‘no repayment’ signal once the credits have been removed from the record.

Whilst the no repayment signal remains in place, Specialist PT Charities will advise the SPoC office when credits become available.

If the debts are cleared when the set-off has been dealt with, DM will ask Corporate Treasury not to reset the ‘no repayment’ signal. If we fail to remove the signal this could stop correct repayments being made to the customer in future.

The caseworker should continue to pursue debts via recovery action in accordance with current guidance.