HMRC published a call for evidence paper at the end of last year and held a consultation in April, which the OTS has now reviewed.

In summary, the OTS says it considers the current eligibility criteria, and the operation of the community buildings rules as an alternative or additional scheme, to be overly complex.

It states: ‘We understand the community buildings rules were introduced to ensure that national organisations such as denominations of churches may claim similar amounts whether they be structured as a single national charity, or a group of individual charities. The OTS recommends merging these two schemes into one, removing the element of choice and doubt currently encountered.’

The OTS makes some criticisms of HMRC’s approach to gathering evidence about GASDS, pointing out that the claim that most charities were aware of the scheme was not surprising, given that respondents were replying to a document on the scheme itself.

The agency recommended HMRC make more effort to seek to talk to charities who do not use GASDS, to find out why. While the majority of respondents did not encounter barriers to claiming relief, the OTS say it thinks there is a need to thoroughly investigate the position of those reporting difficulties.

The OTS also highlighted the need for clear and accessible guidance on the scheme’s operation, saying that a simple online search for HMRC guidance on the scheme produced detailed manual guidance on one occasion, but the more straightforward less detailed summary guidance on another, with no obvious signposting between the two.

Regarding the reform proposals, the OTS said while it was somewhat unfair that a charity could not claim in its opening year, there was a need to see a compliance history, and the planned change should enable a charity to claim in year two.

On Gift Aid, the matching rule limiting a GASDS claim to ten times a charity’s main Gift Aid claim was raised in the call for evidence. On simplification grounds OTS said it would suggest that if the charity makes a successful gift aid claim that should suffice to establish eligibility for a GASDS claim, i.e. the 10 x matching could be replaced with a simple de minimis of say £100.

The consultation suggested extending GASDS to include contactless debit or credit cards, but said it was disappointed that HMRC had not considered giving via text message.

The most contentious issue raised during the consultation was identified as the community buildings rules and the question of connected charities.

The OTS suggested: ‘To fully simplify the position, the connected charities rule would need to be recast, in order that only those charities with a sufficiently substantive economic connection were caught. A review could then be undertaken to see if this would remove the need for community buildings relief altogether.

‘Alternatively, it could be worth considering recasting the rule on the basis that any charity (whether connected to others or not) which operated one or more community buildings had an aggregate allowance equivalent to £8,000 per building, but removing the restriction on funds received outside the building.’

Gift Aid Small Donations Scheme Consultation response by the Office of Tax Simplification is here.