Independent museums have been warned to tighten up procedures on Gift Aid donations after a crackdown by HM Revenue and Customs (HMRC).
At least two small museums have been forced to pay back part of their Gift Aid on admissions after failing to satisfy the HMRC criteria on recording donors' names and addresses.
Many museums exploit a loophole in Gift Aid guidelines that allows them to charge an extra percentage on normal admission and claim Gift Aid on it - something it is believed the Treasury never intended Gift Aid to cover.
The HMRC denies a crackdown, but has urged museums to tighten auditing procedures after several breaches of rules came to light.
The Thackray Museum in Leeds challenged an initial request by the HMRC to repay its entire £50,000 Gift Aid income over four years because it had recorded donors' names incorrectly.
The HMRC said that without full information, it could not be proved that donors were taxpayers, and therefore eligible for Gift Aid.
Thackray Museum chief executive Almut Gruner said the HMRC had initially asked for four years' donations totalling £50,000 - the equivalent of more than half the museum's cash reserves.
A deal was agreed under which the museum traced sample donations for three months. Three-quarters were passed by the HMRC, with the remainder used as a sample to calculate the museum's liability, which over four years totalled £13,500.
The Thackray Museum is trying to recoup losses from its accountants, which it argues should have informed it of the HMRC's requirements.
Gruner advised museums starting Gift Aid schemes to agree procedures with their local HMRC office. "Write a letter stating exactly what you want to do and get them to confirm it - we didn't do that," she said.
In a similar case, Newark Air Museum had to refund more than £4,000. The HMRC said Gift Aid rules were clearly displayed on its website, with more help available via its charities helpline (0845 302 0203). The Association of Independent Museums (AIM) said such cases are rare.
AIM chairman Bill Ferris said: "Get your local HMRC office to confirm in writing that your system is right, in advance. If the HMRC later takes a different view, you have good ground to stand on."
At least two small museums have been forced to pay back part of their Gift Aid on admissions after failing to satisfy the HMRC criteria on recording donors' names and addresses.
Many museums exploit a loophole in Gift Aid guidelines that allows them to charge an extra percentage on normal admission and claim Gift Aid on it - something it is believed the Treasury never intended Gift Aid to cover.
The HMRC denies a crackdown, but has urged museums to tighten auditing procedures after several breaches of rules came to light.
The Thackray Museum in Leeds challenged an initial request by the HMRC to repay its entire £50,000 Gift Aid income over four years because it had recorded donors' names incorrectly.
The HMRC said that without full information, it could not be proved that donors were taxpayers, and therefore eligible for Gift Aid.
Thackray Museum chief executive Almut Gruner said the HMRC had initially asked for four years' donations totalling £50,000 - the equivalent of more than half the museum's cash reserves.
A deal was agreed under which the museum traced sample donations for three months. Three-quarters were passed by the HMRC, with the remainder used as a sample to calculate the museum's liability, which over four years totalled £13,500.
The Thackray Museum is trying to recoup losses from its accountants, which it argues should have informed it of the HMRC's requirements.
Gruner advised museums starting Gift Aid schemes to agree procedures with their local HMRC office. "Write a letter stating exactly what you want to do and get them to confirm it - we didn't do that," she said.
In a similar case, Newark Air Museum had to refund more than £4,000. The HMRC said Gift Aid rules were clearly displayed on its website, with more help available via its charities helpline (0845 302 0203). The Association of Independent Museums (AIM) said such cases are rare.
AIM chairman Bill Ferris said: "Get your local HMRC office to confirm in writing that your system is right, in advance. If the HMRC later takes a different view, you have good ground to stand on."
At a glance
- Gift Aid allows charities to reclaim tax on donations.
- To do this, charities must prove donors are taxpayers with a "clear audit trail" linking the donation to them.
- Guidelines on the HMRC website specify that donors must include "their name" and "home address".
- Providing a surname is not sufficient, as HMRC says there may be several people with the same surname at one address, not all of who are taxpayers.
