Gift aid restricted

A registered charity had two subsidiary companies both of which were loss-making. The charity claimed gift aid in respect of a donation of £358 279.

HMRC disputed the amount of relief due on the basis £354 379 had been paid to the subsidiaries and only £3 900 to the charity.

The organisation’s representatives accepted the donations had been made to the subsidiaries but said the funds were for the benefit of the charity.

They claimed the trading companies had been set up to provide the funding for the charity’s activities and in effect all three companies formed on entity.

The First-tier Tribunal said the argument was wrong in law: FA 1990 s 25 specified that gift aid could apply only to donations made to charities established solely for charitable purposes. This did not include donations made for the benefit of charities.

The subsidiary companies...