A charity, which is a member of  the CTG Gift Aid Working Group, was recently challenged by HMRC in respect of its claiming Aid where sponsorship is taken out in the name of the donor (for example where a child abroad or animal is supported), but as a gift for a friend, relative or other third party.

HMRC has recently issued a response and the charity is happy for it to be shared more widely, as it identifies an important issue of general principle. It is hoped that this will provide important clarity for other charities but you are reminded that in each case the application of this guidance will depend on the specific circumstances of the fundraising product in question and that seeking prior clearance from HMRC may be advisable.

“We are aware that many charities have considered and adopted a vast array of new marketing practices to encourage the general public to donate to their charity and therefore increase the funds available to spend of their charitable objectives.

 Applying the charities legislation to many of the new marketing practice can be challenging for us in HMRC, and as you know we often seek an opinion from our legal colleagues when forming a view, as is the case here.

 I’m happy to now be in a position to share HMRC’s view of sponsorship schemes, when the sponsorship is taken out in the name of the donor and as a gift for a third party. HMRC’s view is that in both situations the individual is making a donation to the charity, which can be accepted as a qualifying donation on which Gift Aid can be claimed.

This is of course subject to all other considerations been met, including:

• The charity must have a Gift Aid declaration made by the donor which covers the donation
• The value of any benefits associated with the gift are within the statutory limits.”