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Small Charitable Donations Bill

Volume 550: debated on Tuesday 11 September 2012

As a result of the announcement by the Chancellor at the 2011 Budget HMRC is developing a new online system for charities to claim gift aid, which is planned to be introduced in April 2013. Charities will use the same forms, procedures and IT to claim under the gift aid small donations scheme as for gift aid. The advance from the Contingencies Fund will enable HMRC’s IT provider to begin work on developing the elements of the system that are unique to the new scheme. Starting the work early gives the IT provider sufficient lead-in time to have the IT ready for the start of the gift aid small donations scheme in April 2013.

If the work on the new scheme were to be delayed until after Royal Assent then HMRC would incur increased costs of around £1.3 million. This is because, in order to avoid delaying the introduction of gift aid online, the IT system would need to be tested twice; first to test the IT that will deliver gift aid online and later to test the IT system from scratch, after the incorporation of the elements that are unique to the new scheme. Testing is a necessarily time-consuming and expensive process. There would be additional costs as a result of the delay because the IT to support the new scheme would not be implemented at the same time as gift aid online.

HMRC will absorb the capital and resource costs of developing the IT, subject to the passage of the Small Charitable Donations Bill.

Advance funding will allow for the development of the IT required to enable charities to make claims under the gift aid small donations scheme and for HMRC to make repayments and generally administer the scheme.

Parliamentary approval of £250,000 for this new service will need to be included in the estimates ambit for Her Majesty’s Revenue and Customs. Pending that approval, urgent expenditure estimated at £ 150,000 will be met by repayable cash advances from the Contingencies Fund.