An item in the March copy of ‘the LINK’ questioned the morality/legitimacy of Gift Aid. Gift Aid was introduced by Parliament in Section 25 of the Finance Act of 1990, and was further amended by Section 29 of the Finance Act of 2000.
It was introduced by the then government to encourage individuals and companies to donate more money to registered charities, to reduce pressure on the government itself to give more in aid. To qualify for Gift Aid a donor must have paid sufficient tax to the Revenue Authority to cover the tax on all donations registered in the tax year. Each donation must be supported by a declaration to that effect. The registered charity then submits a list of all Gift Aid donations supported by an appropriate declaration to HM Revenue and Customs. They are responsible for checking the claims as appropriate, and authorising a repayment of tax paid on those donations directly to the charity. The donor receives no benefit from this transaction, but the charity does. It is in effect a donation from the government to the charity.
There is no way that the above can be construed as tax avoidance, tax evasion or in any way immoral, as the government is giving tax which has been legitimately paid. False claims by charities and false declarations by donors are a different matter, and such cases will attract heavy penalties.