3.8.1 Invalid declarations Where a charity has not maintained an auditable record of Gift Aid declarations and the making of them, or where those records are insufficient to show that the donor made the declaration, the declaration will be invalid. A charity will then be liable to pay back to HMRC all tax repayments received in relation to those gifts. This will include interest and possibly penalties. A charity may be able to validate an invalid declaration by sending a written statement to the donor — this includes a statement sent by email. The written statement should contain:
all of the information provided by the donor in their declaration
an explanation that the donor must have paid either enough Income Tax or Capital Gains Tax, or both, to cover that reclaimed by the charity
the date on which the charity sent the written statement to the donor
a statement giving the donor 30 days from the date of the written statement in which to cancel the Gift Aid declaration
HMRC will accept that a written confirmation has been issued where the charity can show it has issued a standard letter template in an acceptable format and provides a list of the donors to whom the letter was sent. Where the donor cancels their declaration within 30 days, the declaration will be treated as if it was never made. The charity must maintain an auditable record of all written statements and cancellation notices. If the written statement is marked ‘returned to sender’ or ‘not known at this address’ the charity should treat the declaration as if it has been cancelled. The charity must keep a record of the cancellation. If there’s no indication that the donor did not receive the notice and the donor does not cancel the declaration then the declaration will be considered valid and Gift Aid can be reclaimed by the charity on the gift or gifts to which it applies. The charity must maintain records of the written statements and any cancellation notices to a suitable standard to enable the records to be audited. 3.8.2 Cancellation of declarations Donors are entitled to cancel their declaration at any time. They may do so by notifying the charity in any convenient way. The charity should keep a record of the cancellation of a declaration, including the date of the donor’s notification. A cancellation will normally have effect only in relation to donations received by the charity on or after:
the date on which the donor notifies the charity of the cancellation
or such later date as the donor may specify in the cancellation
The charity must not reclaim tax in respect of such donations. Any donations received before the date of the donor’s notification will still qualify as Gift Aid donations. If a donor who’s made an oral declaration and been sent a written statement by the charity cancels their declaration within 30 days of being sent the written statement, the cancellation will have retrospective effect, so that it’ll be as if the declaration had never been made.