HMRC has announced changes to help charities process refunds, collect donations and claim gift aid for events cancelled due to coronavirus
The guidance states if a charity event is cancelled due to coronavirus, HMRC will accept that where a person due a refund decides to donate this to a charity, the charity can still claim gift aid, subject to certain criteria.
These are that the individual does not receive a benefit as a result of their donation, agrees that the cost of their ticket becomes a donation, and completes a gift aid declaration.
The charity also needs to keep an audit trail, including a copy of the agreement from an individual agreeing to the donation of the cost of the ticket.
The charity no longer has to physically refund the ticket price for the individual to re-donate.
This change applies to any ticket for a charity event which has been cancelled due to the coronavirus emergency. However, if the charity event has been postponed and not cancelled, any tickets for that event are not eligible for the temporary changes.
In order to claim gift aid, the charity must contact the individual who previously purchased the tickets of the cancelled event and explain that they are entitled to a refund but may wish to donate the cost of the ticket to the charity.
The charity must make it clear that the individual does not have to donate the refund but if they choose to donate it, it is non-refundable.
Charities must also check the individual has enough tax to cover the donation, and should document the conversation with the individual and keep records of this.
John Hemming, chairman of the Charity Tax Group (CTG), said: ‘This was a leading proposal in a recent CTG letter to the Chancellor and is a practical solution to unlock important tax reliefs for charities at a time when cash flow is under serious strain.
‘CTG is grateful to HMRC officials for agreeing to implement this concession in a simple format that will be easy for charities and donors to follow.’
Guidance Processing ticket refunds for cancelled charity events during the coronavirus (COVID-19) pandemic