tiintax

Dear Mr Jones

This is an individual’s response and is also posted online (with commentary) at https://tiintax.com/.

First, you may be aware that I have already written to the Consultation Coordinator and to BIS to say that I think this consultation document is technically defective as it doesn’t contain an adequate impact assessment (it contains the outline of what the change is, but no estimate of the costs, benefits and impacts of making such a change).  I invite you to publish such an estimate and to extend the consultation long enough for the third sector to have the opportunity to examine your estimates adequately in accordance with the government’s Code of Practice on Consultation, the Tax Consultation Framework, and the Impact Assessment guidance.

Turning to the content of the consultation, I first of all have to reject the assumption behind the policy objective that it is “disproportionately burdensome” to collect gift aid details from people attending a religious service.  Indeed, the system is so well bedded in that when I attended the funeral of an elderly friend a few weeks ago the Minister announced that it had been her last wish that people would not only donate to the church instead of sending flowers but that they should do so via the envelopes at the back of the church so that gift aid could be reclaimed on all the donations!  It is my experience as an occasional churchgoer and attender at cultural and other events that everyone knows you have to tick the box and fill in the gift aid declaration, and that “sticking it to the government” by doing so is often part of the pleasure of so giving.  Indeed I answered a Radio 4 Woman’s Hour appeal to donate some old bras to Oxfam last week and made sure to complete the gift aid sticker and add it to the package so that they could reclaim the gift aid on anything they raised from the disposal.  Sorry, but the idea it’s burdensome for charities to operate Gift Aid just won’t wash as far as I, as a small scale donor, can see.

Having broken the link between the donor and the donor’s tax in the way you describe in the section on Policy Design Considerations you then have to introduce a burdensome set of anti-avoidance regulations to ensure that the charity is actually collecting money from the public (and not just turning £x into £x+y via the magic of government funding) and not turning itself into a hundred daughter charities that can collect £5000 each – but also that the charities which are already daughter charities of a larger entity can’t go “ha ha we win!” and profit from their accidental advantage.  It’s a mess.

You say, however, that these design issues are fixed and not open to consultation, which is rather unhelpful.  Looking at the areas which ARE open to consultation, then, you seem to be trying to find a simple way of having the government top up charity cash collections without opening the floodgates to anyone to apply.  I agree that to tie the top up to an existing good record of making gift aid claims is sensible, but the attempt to get around the daughter charities/single charity with lots of locations avoidance issue via buildings is doomed.  You give (on page 19) three examples of how you think tying the top up to buildings might work:

• example 5, lots of local groups in separate buildings are entitled to “up to” £255,000 – 50 groups at £5000 each
• example 6, one local group in one building is entitled to up to £5000
• example 7, a national charity with 1000 charity shops is still entitled only to the £5000 because no qualifying activity happens at the shops.

Well, I may only be a retired tax inspector but I can see clearly that if I were a national charity with a string of charity shops I’d pretty much start running qualifying activities in them right now so as to be ready to claim the full 1000x£5000 when the scheme is in force!  I’d suggest the third sector starts now, declaring the first Monday in every other month as “GASDS day”, carefully reading the small print in paragraph 5.16 to make sure they have at least 10 group members present on at least six occasions in the year and that the events are open to the public and include a small change collection…

It’s an absurd and unworkable design.  Much simpler, fairer, and in keeping with the spirit of the policy objective would be to simply top up any charity’s gift aid claim by a flat rate figure each year.  That seems to be effectively what’s going to happen, you’re just going to make the charities go through a lot of hoops (and stress, and paperwork) in order to achieve the same result.

I suspect the reasoning behind not doing this is that it would involve giving too much money away, so I have a simpler proposal yet: don’t do it!  Improve the Gift Aid scheme instead, by retaining the link between donors gifts and the amount the charity receives, but breaking the link between the donors’ TAX and the amount the charity receives.

Here’s an example.  My late father used to give regularly to the church where he worshipped.  When he retired he increased his donation, but when he came to complete his next tax return he had donated more than the tax he had paid and so was made to pay over an amount equivalent to the tax reclaimed by the church.  Yet when I gave to charity, as a higher rate payer, I was able to reclaim the difference between the tax I had paid on the amount donated and the amount the charity had claimed back on it!  Simply abolish the link between the donor’s tax and the gift aid, and otherwise let the system carry on as now.  So people who give out of their meagre pensions can carry on doing so without fear of finding they’re being personally penalised by the taxman for so doing, and people who give from abundance can carry on giving, and charities can carry on reclaiming the standard rate of tax they have paid – but no individual personally benefits from charitable by getting a repayment.

I’d like to see an impact assessment of designing the scheme like that.  But then, as I’ve said, I’d also like to see an impact assessment of doing what you propose in the document.  I rather suspect the reason you haven’t published one so far is that the policy design includes so many complexities that it’s nigh on impossible TO cost, which suggests to me it’s a bad idea.  Sorry and all that.