Gift Aid “can be claimed” on Waived Refunds, HMRC confirms

Gift Aid “can be claimed” on Waived Refunds and Loan Repayments, HM Revenue & Customs (HMRC) has confirmed.

It was previously suggested that a waiver of debt was not regarded as permissible for Gift Aid “without funds being returned to a donor first” – as Gift Aid requires a “payment of a sum of money”.

But in response to representations made by the Charity Tax Group (CTG), the tax office has now confirmed that donors can transfer unclaimed purchases, such as tickets to cancelled events, to donations to claim Gift Aid.

The new guidance, found here, states that HMRC “will consider donations made from a waiver of a right to either a refund or loan repayment to be eligible for Gift Aid”.

“This is provided there is a record of a formal waiver held by the charity and all other Gift Aid rules are met,” the guidance adds. “The donation will be considered to have been made at the date of the waiver and not the date of the original payment. A Gift Aid declaration will need to be collected by the charity if one is not already held for the donor.”

HMRC says an email exchange, a letter, or a recorded telephone call will be accepted as a “formal waiver” for a nominal amount.

Larger amounts, meanwhile, should include documentation and details of what is being waived (making it expressly clear that the lender is giving up all legal rights to any future repayment) and confirmation that the amount waived is to be treated as a donation for Gift Aid.

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