The Debate – Is the Revenue being fair on gift aid?

Thrown out of paradise

By Gaynor Coley

We are trying to make the Eden Project worthwhile for our depressed region, for the UK and for the world.

We’ve made a good start. Now in its fourth year, we have welcomed more than five million visitors, generated more than £145m per annum for the Cornish economy and have just started work on a new education facility.

But we received one surprising and potentially financially crippling disappointment with the clampdown on charities ‘exploiting’ what the Treasury and the Inland Revenue see as a loophole in the gift aid legislation.

Running this unique organisation costs us £18m a year, but gift aid has brought a very welcome revenue boost to Eden of more than £1m since we started claiming it in August 2002.

The Revenue admits that some £395m goes unclaimed every year by charities, thus the ‘saving’ of £10m by changing the rules to prevent many of them claiming gift aid on admissions to their sites seems perverse.

The majority of our visitors are delighted that they can contribute more to our work by becoming a ‘day member’ and allowing us to claim the tax back. Gift aid has helped them understand that Eden is an educational and environmental charity, not just the ‘green theme park’ they expected.

Many visitors feel their contribution really counts. We can’t put a price on that. They are perhaps also surprised by – and grateful to – an enlightened government for the opportunity to say where a little of their tax goes.

We followed Revenue guidelines – ‘a donation for free admission can be gift aided’. It wrote approving our scheme, so we invested heavily in staff, presentation and systems to handle the required data collection. Now, less than two years in, the rug is being pulled from under us.

It is ironic that a government publicly encouraging competition should disadvantage those whose instincts to generate added resource to further their aims, rather than limply waiting for handouts, should be penalised.

The government wanted to be seen to be doing something for charities, but was shocked when we got off our backsides and seized the opportunity.

  • Gaynor Coley is development director of the Eden Project

Taking back its own gift
By Nick Brooks

The Inland Revenue appears to be starting from the assumption that heritage and conservation charities are exploiting some form of tax avoidance scheme. Bearing in mind the government’s desire and considerable financial investment to encourage new donations, it seems quite disingenuous to try and stop a genuine method of increasing charitable income.

Even more astonishing is the fact that the Revenue was itself advising charities on how to ensure their paperwork met the requirements of this aspect of the legislation.

In its consultation document on this subject, the Revenue states that ‘gift aid is about encouraging additional donations to charity – the donor should clearly be giving more to charity than simply paying the equivalent of an admission charge’.

Where in the legislation does it say that gift aid is about ‘encouraging additional’ donations? Gift aid is about ‘promoting’ donations. Furthermore, where is the legislative support for the statement ‘the donor should clearly be giving more’? It seems that the Revenue is seeking to imply words that have no statutory basis.

The consultation document also then asks: ‘How much more than the normal admission charge should the payment be for the whole amount to qualify as a donation?’ Where is the logic in requiring an amount given under gift aid to be more than the admission charge?

The final question is a ‘killer’. It asks: ‘Do you have any other ideas on an approach that would address the concerns of heritage and conservation charities while meeting the principles of the gift aid scheme’.

Firstly the case is not proven that this does not meet the principles of the scheme, secondly there seems little point in coming up with another valid scheme only for it to be torn to shreds three years down the road.

Ironically, if no additional source of income is found to replace what is proposed to be removed, who will have to foot the additional cost to keep these heritage and conservation projects running?

You’ve guessed it – the Treasury!’

  • Nick Brooks is head of not-for-profit at Kingston Smith.

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