Sunday, 5 June 2016

HMRC Deliberately Obstructing Gift Aid Registration?

In the UK charities and non-profit organisations are entitled to register for Gift Aid. This means that for every £1 in public donations made by UK tax payers, the government will match 25p.

Extremely useful for charities.

Extremely easy to see why the government might wish to make the registration system so mind-numbingly convoluted that many charities give up straight away.

I feel it goes further than that. From what I have seen, it appears there is a concerted effort to turn away eligible organisations.

As someone who helps non-profits navigate paperwork for a living, I rejoiced when Gift Aid switched from paper to online registration

Having just attempted that online registration process, I honestly can't believe it's that bad by accident.

The old system used to be incredibly straightforward. You filled in an eight page CHA1 form and sent it to HMRC with a copy of your bank statement (if you had one), governing document and evidence of your activities.

The new system is filled with really irritating issues. Irritating, but probably just poor design by an organisation well known for under par web processes. Simple things like:


The problems begin right from the outset.

You want to register for Gift Aid. You might sensibly search register for Gift Aid online. You would get the following link: Claim Gift Aid Online.

If you click the big, green Start Now button you'll get sent to an HMRC log-in which will require your Government Gateway ID. So, first, you need to register your organisation with Government Gateway.

Only, when you eventually manage to sign in, you'll get the message You're not set up to manage taxes online and there won't be anything in there with the words Gift Aid or Charity to offer you further support.

This is because underneath the big, obvious Start Now button for claiming Gift Aid there is a subtle heading saying Before you start...

You can't just go to Claim Gift Aid Online and expect to claim Gift Aid online. Oh, no no no.

There are two other steps you need to attempt.


Fist off, you have to apply for a certificate to prove your tax exempt status. You need to do this even if you are fully registered with the Charity Commission because HMRC and the Charity Commission don't communicate with one another, that would be far too simple.

The fun begins straight away:

For your security, you’ll be signed out if you don’t use the service for 15 minutes or more. 
An unfinished application is only stored for 28 days from the last time it was saved.

The next piece of entertainment is that traditionally a charity in the UK must have a minimum of three trustees: Chair, Secretary and Treasurer, and a dual authority bank account. This second bit means that cheques require two signatures. No single person should be able empty the account.

Because of this, many small charity start-ups have the minimum requirement of three trustees with two bank signatories chosen from among those three. So, three trustees total.

It is reasonable to assume that trustees who deal with the charity's accounts are also going to be authorised to speak to HMRC regarding Gift Aid.

If you're doing that, you might find yourself stumped when HMRC ask you to provide the national insurance numbers for a minimum of four people involved in your organisation. 

After having told them about two other trustees.

Why four? Nobody knows. 

Time to promote someone really fast.


All of that is just HMRC being as helpful as you'd expect.

Then it starts to get extremely questionable.  

You finally make it to the end of the application process. 

You're given a list of supporting documents and less than one month to submit them. For example, if you submit on 3 June, the application will be rejected if your supporting documents haven't been received by 1 July.

There is a section at the beginning of the application where you enter your bank account details because:

Your charity’s bank, building society or credit union account details are needed so that Gift Aid and any other tax repayments can be paid into it.

In the case of a new charity start-up they may only just have set up a bank account. They may even be waiting to register for Gift Aid before they start fundraising, because 25p per £1 is not to be sniffed at.

Because they do not have account statements to show HMRC, they have to explain why. The legitimate answer is: 'because we have only just opened a bank account'.

Here is the list of documents they will then be asked to supply:

Notice there is no request for anything related to bank statements, because, in the banking section where they supplied their bank details, they explained they didn't have any. No other bank-related papers are listed above.

One entire month later and this rejection notice arrives:

Accounts were never asked for in the first place and instead of asking for the missing document to be sent, the entire application is rejected, all of the supporting documents that were painstakingly photocopied are binned, and the organisation is told to start the entire process again without even the courtesy of giving the web address to the  online application form.

There is one extremely patronising web link included to Find out what you can expect from us and what we expect from you.

I think we are all aware of what we can expect from HMRC.

Rejecting applications from charities because they didn't supply documents that were never asked for is ridiculous. Nothing about this feels like administrative myopia. It looks like clear-sighted obstruction.

Friday, 3 June 2016

Funding Central Goes Subscription

Just received an email from NCVO who run the (until now) free Funding Central database in the UK.

They try to make a reasonable argument as to why an online database of trust funding donors that has been free for the past seven years now requires users to pay for it:

For the past seven years NCVO has delivered Funding Central under contract to the Cabinet Office; the Cabinet Office ended their funding of Funding Central on March 31 2016.
NCVO recognise the vital importance of Funding Central to the voluntary sector and are committed to continuing it. But to keep Funding Central running we need to replace the Cabinet Office funding.

At first I thought 'Oh, well, that's awful that the Cabinet Office pulled their funding, how sad.'

Yet, the further I read, the faster I feel sympathy slipping away.

  • Since 2009 nearly 100,000 users have registered
  • Carrying out hundreds of thousands of completed funding searches
  • Our weekly funding update emails have been opened nearly 8 million times
  • Our users tell us we save them on average three hours of work a week
  • Our users told us in our recent survey they secured on average around £18,000 from funds found through Funding Central last year.

Really? 100,000 registered users? 8 million bulletin reads? Three hours of time saved a week?

And you turn round after it's all over and say 'Oops, sorry'?

At 100,000 petition signatures, a topic gets debated in parliament.

Nobody who can avoid it is going to pay for a service that has been free for years when they weren't even offered a chance to fight for it. As a business woman, I'll subscribe through one of the small charities I work with who are not eligible to pay (under £100,000 annual turnover). Large charities can go through small charities. It's not mean, it's money smart at that point. 

But I would have lobbied my MP, I would have signed a petition, I would have tweeted shame down upon the Cabinet Office had NCVO given me that opportunity. Had they utilised their membership base. Had they organised a campaign. Had they said something before the funding ran out.

But, oops, sorry.

This from an organisation whose webpage banner reads 'We're stronger together.' What's the point of massive membership if you're not going to mobilise them?

Some role model for the voluntary sector that is.

I've just tweeted them to find out how much an automated online database costs each year. I'll post the reply if and when.

Friday, 22 April 2016

Why CIOs Seem Like a Bad Idea

I'm posting this on here as a discussion on LinkedIn because it's too long for their word count.


I recently received an e-mail about a consultation the Charity Commission of England & Wales are holding into whether to allow existing charitable companies (registered with Companies House), to become Charitable Incorporated Organisations (CIOs) with the Charity Commission.

I run a charity start-up service, assisting small organisations and international NGOs in navigating the paperwork involved in charitable status in the UK.

The traditional route to registration has always been to limit your liability by incorporating as a Charitable Company Limited by Guarantee through Companies House. This is why most charities display both a charity number and a company number.

A couple of years ago, a new method of incorporation was introduced – the Charitable Incorporated Organisation (CIO). Instead of registering with Companies House, you register directly with the Charity Commission.

Up to now, I have always advocated the traditional Companies House registration route.

I wanted to share my main reasons for this – my concerns over CIOs – in order to gain insight from others. Is my reasoning correct? What do others recommend?

So, my three main objections to CIOs:


If for any reason the Charity Commission revoked charitable status, the organisation would cease to exist – what happens to the assets? If a Charitable Company loses its status or is refused registration, it still retains its assets and usually HMRC status. 

This is largely what CIOs were designed to address – the Charity Commission’s lack of control over charities. Charitable status in a meaningful sense (tax status) is granted by HMRC, not the Charity Commission. Charitable Companies exist with tax exemption and without Commission registration.

Although I sympathise with the desire of the Charity Commission to exercise more control, from a client perspective, I couldn’t in good conscience tell them to choose a CIO knowing there would be a risk of full closure, whereas a charitable company could continue to operate.


A fellow consultant pointed out the conundrum: If a CIO isn’t registered with Companies House, what does a credit agency look at when deciding whether to offer a loan? If a CIO needs a loan for land or buildings in the future, will this cause problems?


Finally, my largest objection is simply the way the CCE&W currently communicates. I must exempt OSCR (Scottish Charity Commission) from this, as I’ve always found them very helpful and responsive.

It takes four separate clicks to get to the general enquiry form (two of them ‘make a general enquiry’). Once you get there, you’re curtly told the CC won’t bother responding if the answer is in published guidance: “The commission doesn’t respond to requests for advice or queries which could be dealt with by the guidance above.”

In practise, this is a real pain. I contacted them to ask whether a Debt Management Program precludes someone from being a trustee. They sent me guidance on Individual Voluntary Agreements, telling me to read it. A DMP and an IVA are different things. The e-mail had a DO NOT REPLY catch on it, so the only way to ask them to answer my original question was to go back through the entire query process again. It just seemed utterly facetious. 

It also seems to suggest that the CC have neither the time nor the staffing resources to run a friendly customer-based operation.

In their guidance on CIOs, the Commission states: “There are over 160,000 registered charities in England and Wales.”

When you do an advanced search on the Commission website, it says there are currently 6,857 CIOs registered. That’s around 4% of all registered charities. 

Whereas the Charity Commission may be coping at present, it isn’t making any money from CIO registration, so the workload is going to increase but staffing is unlikely to. I worry how they are going to cope with administering such a system in the future, when they are already uncivil towards querents.

Companies House are tried, tested, and usually fairly quick to respond with helpful advice via telephone and e-mail.

The final flashing red light for me is that the Commission waive the £5,000 minimum threshold for CIOs, which companies are obliged to have in the bank before applying for full charity registration.

I am innately suspicious of a regulatory system which needs to incentivise charities to be regulated. Either, as a regulating body, you can cope with regulating all the charities in England & Wales, and therefore you do so – requiring nobody to have a £5,000 minimum threshold (this works in Scotland), or you can’t, so you exempt charities under £5,000 to cut back on the workload. Bribing people into becoming a CIO by dishing out a registration number seems highly questionable on both ethical and practical grounds.

That’s currently my line of thinking.

I’d welcome a discussion on it.

Thursday, 9 October 2014

Brainstorming No-brainer

Very interesting article explaining why brainstorming doesn't work so well, and suggesting another approach, the equally buzzwordish 'brainswarming':

While the traditional brainstorming has always involved a room full of collaborators blurting out ideas, McCaffrey proposes a more silent approach called “brainswarming,” which encourages individual ideation within the context of a larger objective. You start brainswarming by placing a goal or problem at the top of a white board, then listing the resources available to meet these problems at the bottom. Members of your team sit independently and write down ideas for tackling the problem from either end. 
McCaffrey has found that natural “top-down” thinkers will begin refining the goal, while “bottom-up” thinkers will either add more resources or analyze how resources can be used to solve problems. The magic happens in the middle, where these two factions connect. 

One for the workshop toolbox.

Friday, 26 September 2014

Charity Merger

If your organisation is thinking of a merger, check out The Good Merger Guide

The Good Merger Guide is a practical, logical and succinct guide which is offered as a free resource, for any charity or civil society organisation looking to explore a pathway to a successful merger

Top tips and considerations on where to go next.

Saturday, 13 September 2014

Charity Commission Website Change

The Charity Commission website is about to move over to the UK Government pages according to their recent update. I don't know whether this means that previous links on this blog will stop working - quite probably. When I get the time I will go through and amend them.