Update

Charity dinners

BDO Stoy Hayward and HMRC have put together new guidelines regarding fundraising event dinners. The move is in response to the HMRC investigation of a number of charities and its concerns over incorrect gift aid relief claims for fundraising dinner events.
The guidelines highlight that for gift aid to apply, the donation must be purely voluntary. Where a charity specifies a 'minimum donation' or fixed price on a ticket for an event, such donations would not be regarded as voluntary. Thus charities wishing to claim gift aid should make it clear that they are requesting voluntary donations by specifying 'suggested voluntary donation of £x' on event literature.
Daniel Dover, head of the tax investigations group at BDO Stoy Hayward, comments: 'Where donations are requested on this basis, clearly the charity cannot rely on a minimum level of proceeds to their event. Therefore, a careful judgement must be made as to whether the level of voluntary donations will be sufficiently generous to cover the cost of organising the event and provide additional funds to make the event worthwhile. Trustees should therefore retain documentary evidence of the charity's dinner event activities'.
Charities need to ensure that benefits are not received by donors as a result of giving voluntary donations, or the donations may fall foul of the donor benefit rule. This states that where benefits such as a meal are received 'in consequence of' a donation, gift aid will not apply if the benefit exceeds certain limits. For fundraising dinners, the value of the benefit is the direct cost to the charity before sponsorship in staging the event divided by the number of people attending. Unfortunately for many fundraising dinners, the costs per head will exceed these limits.
However, the guidelines contend that where invitations for an event request 'suggested voluntary donations of £x' the charities are in reality staging free events for potential supporters and donors. This means that any benefits received such as a free meal are not received 'in consequence of a donation' but are received in consequence of the invitation to the event. This means that the donor benefit rule will not apply and gift aid relief will be claimable.
A full copy of Guidelines for Charities: Fundraising Event Dinners can be requested at www.bdo.co.uk/giftaid.

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