Funding of the Voluntary Sector

Written evidence submitted by Justine Greening MP (FVS 05)

I attended your Public Administration Select Committee on Wednesday 16th February to discuss funding of the voluntary sector with my colleague Nick Hurd, Minister for Civil Society. During the discussions we touched on two topics where you asked for more details and there is an additional area where I think it would be helpful to provide your committee with further information.

Firstly you asked for more information about the new "intelligent" forms for claiming Gift Aid which HM Revenue and Customs are developing. The intelligent forms are "pdf" (personal document format) forms that charities will be able to download from the HMRC website using free software, fill in and save to their computer. There will be four new forms:

· Charity Application Form (ChA1)

· CASC Registration Form (CASC (A1))

· Charities Variation Form (ChV1)

· Repayment Claim Form (R68(i))

Because the forms are designed to be filled in on a computer they have rules and validation built into them to check that the form is filled in correctly. For example, the new R68(i) will automatically add up the totals of the donations received by a charity, ensuring that donations are entered in the correct accounting periods and the form works out the tax relief due.

This prevents certain common errors being made so that when the forms are submitted to HM Revenue and Customs the form is quicker and easier to process. I was asked to confirm whether these new forms would be introduced before the end of the financial year. I have checked the position and am pleased to inform the committee that the forms will indeed be released before the end of the financial year 2010/11.

Additionally, you asked about the differences between these intelligent forms and the Gift Aid database promoted by the Charities Aid Foundation. I can confirm that these are two different things. The Gift Aid database will hold electronically all the details from Gift Aid declarations. These declarations are currently paper based and many charities find the requirement to keep the paper versions burdensome. The Gift Aid database would allow the details from the declaration to be transferred onto the database so the original paper version can be destroyed.

HMRC will soon be publishing details of the technical legal requirements that will need to be satisfied to ensure that any Gift Aid database that is designed complies with the legal requirements for the Gift Aid. These details will enable charities to introduce such databases if they so chose.

Secondly, the issue of how much it costs HM Revenue and Customs to process a Gift Aid claim was raised during the hearing and the figure of £8 was mentioned. I can confirm that in response to a Parliamentary Question in September 2010, the Government released the figure of £5 as the cost of processing a Gift Aid claim. HM Revenue and Customs has since revised this estimate to £8 to include accommodation and other costs.

Unfortunately this figure has led to some confusion and some have assumed this is the cost of processing each donation made by an individual to a charity but this is not the case. This figure relates to the cost of processing one of the claims made by individual charities to HM Revenue and Customs.

There were about 160,000 such claims in 2009-10. However, a single ‘claim’ by a charity does not necessarily equate to a single donation made by an individual. A claim may consist of information about one donation, or many thousands of donations, depending upon the charity, so the cost per donation is actually much lower. HMRC have estimated it costs the equivalent of about 3 pence per donation to process the associated Gift Aid repayment claim made by the charity. HMRC estimate this cost will fall over the next few years as the new intelligent forms and other process improvements make it quicker and easier to process these claims from charities.

I hope your committee will find this further information useful.

March 2011