Jump to content
House Price Crash Forum

Archived

This topic is now archived and is closed to further replies.

anonguest

Gift Aid Scam?

Recommended Posts

Just seeking some second opinions here on the legitimacy of tax related matter.....

Long time friend/acquaintance runs a small, and worthy, registered charity. Undertakes regular, fully approved, public collections and also with the help of occasional part time 'staff'/helpers.

I, and other people he knows, have been approached and asked if I would like to participate in helping the charity maximise the value of its collections by helping the charity gain the benefit of 'gift aid'.

The idea, very simply, is that publicly donated cash in the form of 'coins in buckets' type donations, from periodic public venue collection, are given to someone such as me. I then make a 'personal' donation for the same amount BUT in the process tick the relevant box that instructs that, as a taxpayer, I wish Gift Aid to be taken into account - and so the charity gains that extra amount on top of the actual donated cash too.

I am not paid or bribed in anyway to do this, and would be doing so purely voluntarily.

To reiterate the charity is bona fide and activities above board, etc. FWIW, if it makes any difference, the amounts that the charity deals with is in the thousands and not tens of thousands or above (i.e it is 'small fry')

Sounds harmless and an easy way of doing some good, in getting my tax to be used for a good cause? My last minute check and be sure, to see if someone spots a flaw that I haven't, is to ask here IF there is any legal ramification in my doing this? The only thing I can think of is that it could be argued that the donation is not actually from 'me' (i.e. the money 'I' donate is not something I would have been donating anyway, etc). Is this a grounds for HMRC to claim 'fraud'?

Share this post


Link to post
Share on other sites

Why not give a tramp a pastie?

Share this post


Link to post
Share on other sites

sounds illegal to me. You don't know if any of the donations qualified for gift aid. HMRC would perhaps be wondering why you suddenly start making large deposits into your account followed by large payments to charity.

Yessssssssss (said with best Jeremy Paxman accent)......that's sort of along the lines of what I was thinking, at the back of my mind, as far as the 'law' was concerned. The question is IF there is any scope/jusitification for HMRC to even iinvestigate the question would I be liable/prosecutable in any way? or would the buck stop solely with the charity.

Share this post


Link to post
Share on other sites

Personally I would charge charities tax like any other 'business' because that is effectively what they are on the whole.

If the government wants to boost them, then they can make big donations directly out of taxes collected.

As we know incentives drive behaviours. And those incentives can often drive bad behaviours.

That's an entirely separate discussion, although FWIW I don't believe in government deciding for me where I want to make charitable donations.

The issue here is a 'legal' one relating to manner of making 'personal' donations.

Share this post


Link to post
Share on other sites

sounds illegal to me. You don't know if any of the donations qualified for gift aid. HMRC would perhaps be wondering why you suddenly start making large deposits into your account followed by large payments to charity.

This.

Avoid.

Edit:

The money donated in the buckets is a charitable donation by kind people. The moment you put that in your account it is technically theft even if a minute later you sign a cheque for the same sum to the charity.

Share this post


Link to post
Share on other sites

Stay well clear I'd suggest. Also depending on the volume and your salary - you could easily find yourself owing HMRC money. Gift Aid comes out of the tax you would have paid. If the charity ends up claiming more Gift Aid than you pay in tax - HMRC will ask you for the difference.

I reckon it's completely against both the spirit and letter of the law on this. What the charity should do is ask the bucket donors for a few details and to tick a box saying they can claim gift aid. It would benefit the charity in the long run as they'd build a contain list of potential future donors.

You could imagine this turning into carousel like fraud. What's to stop the charity recycling your "donation" back to another willing participant and repeating the process?

Share this post


Link to post
Share on other sites

Please note..If you dont pay any tax, say you didnt earn enough, the gift aid will be clawed back from whats left of your earnings by increasing your taxable next year.

Share this post


Link to post
Share on other sites

This.

Avoid.

Edit:

The money donated in the buckets is a charitable donation by kind people. The moment you put that in your account it is technically theft even if a minute later you sign a cheque for the same sum to the charity.

not theft....you need to intend to permanently deprive the owner for Theft.

Fraud on the taxman though.

Share this post


Link to post
Share on other sites

not theft....you need to intend to permanently deprive the owner for Theft.

Fraud on the taxman though.

Even the mere risk of it being argued as being theft by TPTB, let alone the accusation of fraud, is more than enough doubt/worry seeded in my mind now to have no choice but to politely decline my friends request to 'help out'. The problem now is a personal/social one...... how to do so without levelling these accusations against him even though, as said, the charity and activities are all above board etc.

Thanks all for the opinions/food for thought, etc

Share this post


Link to post
Share on other sites

It's clearly illegal. If you did this, and then applied the gift aid donations to your own tax return, you would also be getting more tax relief if you are a higher rate tax payer. It must be frustrating for the charities to miss out on the gift aid from the coins in buckets, but by shifting these donations to all gift aid would presumably ring alarm bells at HMRC, I would imagine that the ratio of gift aid to non gift aid donations might be something that HMRC / charities commission or whoever it is would look at. Chances are you would not get caught, but the upside hardly justifies the risk for you or the charity.

Share this post


Link to post
Share on other sites

I expunge the unworthies in my excrement!! It is worse than Hell, for those nods who believe in fairies.

Share this post


Link to post
Share on other sites

It's clearly illegal. If you did this, and then applied the gift aid donations to your own tax return, you would also be getting more tax relief if you are a higher rate tax payer. It must be frustrating for the charities to miss out on the gift aid from the coins in buckets, but by shifting these donations to all gift aid would presumably ring alarm bells at HMRC, I would imagine that the ratio of gift aid to non gift aid donations might be something that HMRC / charities commission or whoever it is would look at. Chances are you would not get caught, but the upside hardly justifies the risk for you or the charity.

Again thanks for that reply. I'm just glad I still have enough grey cells to at least query/questions 'proposals' put to me rather than just agree to willy nilly without thought - and possibly have consequences later on. Phew!

Share this post


Link to post
Share on other sites

This is wrong in several ways:

First by gifting the money to you, the charity is very likely in breach of its own charter (assuming you are not a needy person who qualities for aid) if the charity donates a significant proportion of its income in this way it could put it's entire charitable status at risk.

Second by accepting the money, you would need to declare it as unearned income to HMRC who will tax it exactly like income from a UK or foreign employer which is outside PAYE, so if you are a higher rate taxpayer thats 40%.

Thirdly by donating the money back to the charity and declaring it, the charity (not you) will be able to claim back that (up to 40%) tax which you have paid.

If this is for a small amount of money like £50, then HMRC are very unlikely to bother pursuing it, but would you want to take on the risk of a Tax fraud investigation for such a small gain?

What you could do legally is this:

They give you £100 cash

you pay tax on it leaving £60

You donate the £60 to them

They claim an additional £24 in tax back.

You gain nothing, they lose £16, the taxpayer gains £40

Share this post


Link to post
Share on other sites

The money donated in the buckets is a charitable donation by kind people. The moment you put that in your account it is technically theft even if a minute later you sign a cheque for the same sum to the charity.

Yep.

Also if you gift-aid it, do you then declare that on your own tax return? That could be either (if no) a discrepancy deserving HMRC investigation, or (if yes) a tax fraud for your own personal gain.

Share this post


Link to post
Share on other sites

I do, occasionally, that too......

That's "direct charity". Somebody needs a pie and you get them one!. Doesn't make sense to me to pay some noble shit, about £155000 a year to run a "charity"!

Share this post


Link to post
Share on other sites

Just seeking some second opinions here on the legitimacy of tax related matter.....

The idea, very simply, is that publicly donated cash in the form of 'coins in buckets' type donations, from periodic public venue collection, are given to someone such as me. I then make a 'personal' donation for the same amount BUT in the process tick the relevant box that instructs that, as a taxpayer, I wish Gift Aid to be taken into account - and so the charity gains that extra amount on top of the actual donated cash too.

Tax?

Do you think it sounds sensible to get involved in someone who's up to something that can only be described as a fiddle?

Share this post


Link to post
Share on other sites

Oligotroph pretty much summed up what I was going to say (more comprehensively than I would have).

I can't imagine how you would even begin to consider that this was above board and not without some risk. I think on a personal level the sums involved would be insignificant and unlikely to raise suspicion, but the thing with any crime (that is what this is) is that it really doesn't pay unless you go for it big time. If the charity is willing to do it with you then I have little doubt they will do it with ever increasing numbers of people and so raising the chance a flag will be raised somewhere. Wouldn't be long until you were dragged in to a tax fraud investigation and I think it highly unlikely that you could argue that you were unaware that it was not illegal.

Share this post


Link to post
Share on other sites

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   206 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.