In 2016/17, HMRC undertook a review of the donor benefit rules, following which new guidance was introduced in August 2019.  Unfortunately, the section of this new guidance relating to the naming of buildings was ambiguous and some advisors had warned that it could be interpreted in such a way that the naming of a building after a donor who had given a substantial amount towards its construction would be treated as a donor benefit.

CTG took soundings in the sector to see whether this was a theoretical problem or whether HMRC was actively implementing a change a policy.  As it was clear that some advisors were already warning their clients that the new guidance was suggesting that a donor benefit could arise, CTG raised the matter directly with HMRC, explaining that the new guidance was ambiguous and appeared to be contrary to the long-standing arrangement whereby the naming of a building was not treated as a benefit.

Following these discussions with CTG, HMRC has confirmed that there had been no change in policy and has issued revised guidance.  CTG is very grateful that, once the matter had been drawn to its attention, HMRC acted quickly and positively to clarify the situation.

The guidance (in HMRC’s Chapter 3) now states:

Acknowledgements

3.19.1 An acknowledgement of an individual donor’s generosity, for example in a printed brochure or on a plaque. This must be a simple acknowledgement and not an advertisement for a business or some form of business sponsorship. A commemorative type plaque recording the name of the individual donor and that they provided a donation, would not be considered a benefit. However, a sign which also promoted a business would be an advert and so would be considered a benefit.

Naming rights

3.19.8 Sometimes charities may want to name a building or part of a building after an individual donor who’s provided a substantial donation to the charity. The principles given in 3.19.1 apply here, and as long as the naming does not act as an advertisement or sponsorship for a business, then the naming of the building or part of the building after the individual donor would not be considered a benefit. If separate advertisement or sponsorship agreements are entered into, these transactions would be outside the scope of the Gift Aid scheme.