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Ash
Ash, Solicitor
Category: Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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Regarding a charity. If a person takes a sum of money (donation)

Resolved Question:

Regarding a charity. If a person takes a sum of money (donation) from a person who is a non-tax payer and then pays this donation himself as a tax payer into a company that he intends to set up as a charity, the outcome is that given his tax-paying status the donation will attract gift aid ie a contribution of some 20% form the government to the charity. I think that logic is right. Is the process that I have described legal?
Submitted: 3 years ago.
Category: Law
Expert:  Ash replied 3 years ago.

Alex Watts : Hello my name is XXXXX XXXXX I will help you with this. Please note that I am a working Solicitor and may be on and offline as I have to attend Court and meet with clients, even at weekends. As such you may not get an instant response when you reply, but rest assured I will be giving your question my immediate attention upon return You do not need to wait here as you will get an email when I reply.
Alex Watts : Is he making a donation or just transferring it please?
Customer:

Not sure. I presume that if he just transferred it, the sum would not attract any gift aid. As he has alluded to this mechanism of the IR 'contributing' I am assuming that he has donated it.

Customer:

I assume that if he donates it then the charity will claim 'gift aid', the IR will contribute to the 'charity' and therefore the networth of the charity will increase by 20% .... is that how it works?

Alex Watts : Is the person receiving it as a donation,
Customer:

The claimant (non tax payer) has given the defendant £13,500 and he has cashed this. It is probably quite likely that the claimant will have said to the defendant that the money is a donation from her because that is what she will consider it as. She will have just considered the defendant to be administering the donation for her, that said the claimant is adamant that the 'deal' was that the money she entrusted to the defendant would yield a monthly income for her - superior to the income she was then receiving from her investments and that upon her death the 'investment' £13,500 would then go to her nominated charities. Not sure if that answers your question?

Customer:

Not sure how a charity, comprising of 'donations' can then pay out interest earned as I presume that that should stay with the charity.

Alex Watts : If the person handling the first donation is just doing that, handling it on behalf of the first person then no, you can't claim gift aid.
Alex Watts : If the person making the first donation does not mind the second person keeping it and if that second person then makes a donation then you can claim gift aid.
Alex Watts : But if the second person is just a conduit for the money, then it's no.
Alex Watts : Can I clarify anything for you about this today please?
Customer:

I think the second person is just a conduit, but will no doubt claim he was 'given' it and then chose to use it as a donation.

Customer:

Does a company actually need to be 'charity' in order to claim gift aid?
I know that if the 'charity' has over £5,000 then it needs to be registered with the Charities Commission and is then subject to the Governance that that brings ..., but do smaller companies just register themselves as being a charity?

Alex Watts :

They don't necessarily need to be a registered Charity

Alex Watts :

But they need to have charitable aims etc.

Alex Watts :

As long as they comply with the definition they can claim gift aid

Alex Watts :

Can I clarify anything else?

Customer:

thank you
In the cover letter I am creating do I simply start it...... Dear Judge Is that the correct protocol?

Alex Watts :

Yes that is fine

Customer:

Thank you

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