NAO Spat With HMRC

I recently noted that, according to the National Audit Office, neither the Treasury nor HMRC know whether Gift Aid and other tax reliefs on donations have resulted in more income for charities.

The report has produced a wee public spat between HMRC and the NAO, which took place at a PAC hearing on the subject on 2nd December.

The Committee’s chair, Margaret Hodge, told HMRC’s chief executive Lin Homer and director of counter-avoidance David Richardson that the report showed that the link between gift aid and higher donations was “at best unproven; at worst giving to charity has actually fallen”.

This set the scene for the spat between Homer and Robert Prideaux, director at the National Audit Office, over whether the charity sector agrees that donations have risen over the 13 years since gift aid was introduced.

Homer is quoted by CivilSociety:

“We and the sector are very clear that donations have gone up, that gift aid has had a very positive effect on individual donations."

Prideaux disagreed and said that the NAO consulted the sector for its report and found “no clear evidence that donations in the round are increasing”.

“They are in absolute terms, but this might be down to demographics and population changes.

We have not said in the report that donations aren’t increasing, but there is no clear evidence that they are increasing, and the charitable sector will back this up.”

Margaret Hodge was also unconvinced, telling Homer:

“You have yet to prove that this radical change in 2000 was value for money for the £1bn that has gone to corporations and high net worth individuals as a bribe to encourage them to do more.”

Hodge asked the HMRC executives to name the ten charities that benefit most from gift aid, but Richardson said that he didn’t have that information to hand and wouldn’t name names anyway.

Tax does have to be taxing.

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