Operating a Gift Aid Scheme:

Records you must keep

The importance of keeping accurate records in order to meet the requirements of HMRC Charities (formerly Inland Revenue) cannot be stressed enough. It is essential that the Church keeps sufficient records to show that the tax reclaims are accurate. These records should enable the church to show:

• an audit trail linking each donation to an identifiable donor who has completed a valid Gift Aid declaration
  and
• that all the other conditions for the tax relief are satisfied.

If adequate records are not kept there may be a requirement to pay back to HMRC Charities any reclaimed tax with interest. There may also be a liability to a penalty.

You should therefore keep records which will satisfy HMRC Charities. In the event that HMRC Charities audits a tax reclaim the auditor will usually ask to see in respect of a donation:

• any Gift Aid Declaration
• in the case of an oral Gift Aid Declaration, a copy of the written record sent to the donor
• any correspondence to or from the donor which relates to his or her Gift Aid donations, including
  - any notification of a change of name or change of
    address
  - any notification of the cancellation of the Gift Aid
    Declaration
• the bank statements
• the paying-in book stubs showing details of all cheques and cash banked
• the cash book recording the receipt of cash donations
• a sample of the envelopes and a record of the sums enclosed
• any other records that are kept relating to the donation

Some of these records will be held by the Treasurer, rather than the Gift Aid Secretary.

Records do not have to be kept on paper. They may be held on the hard drive of a computer, floppy disc or CD ROM, or stored on microfiche. Signed declarations should be kept in a form that preserves the signature – for example, by microfilming or electronically scanning them. Declarations are stored at Church House for Diocesan Scheme parishes.

If you keep your records on computer, it is advisable to make regular back-ups and store these in a different location to the computer. An example Recording Kit is available for a small charge from Church House. You may photocopy this and use as a basis for your records, or use as a basis for a design for computer records. To download a copy, click here.

The Church is treated as a charitable company for the retention of records. Records must be kept until six years after the end of the accounting period to which any tax reclaim relates. This is a minimum period. In the event that HMRC Charities audits your tax reclaim and the auditor identifies errors, he or she may re-open the tax reclaims for earlier years. Therefore, it is in the church’s interests to keep records longer than the minimum period. Gift Aid Declarations are usually not time defined, and will need to be kept indefinitely.

Follow these links for details of keeping Envelope records, Standing Order records, and Cash and other donations.