Report on Gift Aid reliefs, abuse and error

The National Audit Office (NAO) has issued a report examining how HM Revenue & Customs (HMRC) monitors and evaluates the effectiveness of Gift Aid reliefs and how it tries to deal with tax avoidance, fraud and error in relation to tax reliefs on donations. The NAO reports that it is estimated that while use of these reliefs costs the exchequer approximately £2bn per year, around £170m is also lost through abuse of these reliefs or simple error.

According to sources within the sector, the main impetus behind the report is to ensure that charities obtain as much value as is legitimately possible from the use of these tax reliefs, while at the same time identifying areas in which HMRC can improve. Gift Aid is recognised, by both the NAO report and the HMRC, as an extremely important source of income for charities, and as the report mentions it ‘is important that tax reliefs on donations are well administered to protect the reputation of the charitable sector and give confidence to donors’…

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