If your congregation is audited by HMRC, it will need to be able to prove that there is a valid declaration for all donations on which the congregation has reclaimed tax. It is vital, therefore, to ensure that Gift Aid declarations are valid and kept safely. Each declaration, whether written, online or verbal, must be kept for six years following the most recent associated eligible donation.
If Gift Aid is claimed on payments from a donor who has not made a Gift Aid declaration, the congregation will have to repay the tax claimed. If a charity does not keep adequate records, it may be required to pay back to HMRC the tax reclaimed with interest. It may also be liable to a penalty under the self-assessment rules.
Original paper declarations can be scanned and stored electronically, providing that the scanned images can be viewed and printed at a later date if required. Where scanned images are kept, the original paper forms can be destroyed.
Records of verbal declarations
To keep a record of verbal declarations from donors, you can:
- Keep an audio recording of each donor making their Gift Aid declaration
- Keep a record of when the letter confirming a donor's verbal declaration was issued.
You must keep records of any cancelled declarations, including the cancellation date. A donor can cancel their declaration at any time. This will not affect donations already made but any further donations from that donor will not qualify for Gift Aid.
Offering envelopes often incorporate a reference that links a named donor to an ‘enduring declaration' covering all donations to the congregation. In such circumstances, the congregation is advised to keep a minimum of one month's envelopes per tax year, covering a period of four years. For example, a church may decide to keep every general giving envelope received throughout the month of August. After a period of four years the church will have in place a total four months' envelopes, all received during August for the preceding four years. If the offering envelopes incorporate the Gift Aid declaration itself, then those envelopes must be retained for the longer six year period as outlined at the start of this section.
Chapter 7 of HMRC's guidance for charities provides more detail on these audit matters.