No charity donation so £125k Gift Aid claim thrown out

Will Drysdale, Senior Reporter, Business & Accountancy Daily. Croner-i

A taxpayer did not give anything to charity over three tax years but claimed ‘incorrectly’ for more than £125,000 in Gift Aid relief, blaming his accountant.

Aaron Armah has lost an appeal against closure notices that amended his tax return to remove Gift Aid relief under section 28A(1B) and (2) Taxes Management Act 1970. In total HMRC believed £31,717.31 was overpaid in Gift Aid relief between 2015-16 and 2017-18.

The appellant submitted a claim for £40,625 on 18 June 2018, then another claim just two days later for £43,750 with the third on the same day for £42,500 in Gift Aid relief, totalling more than £125,000.

HMRC opened an initial inquiry into Armah on 14 January 2019, issued by HMRC officer Phillip Lloyd, asking for details of his income, employment expenses claimed, and Gift Aid relief claimed for the three tax years in question.

There was no response from Armah, which pushed Lloyd to issue an information notice on 11 March 2019 requesting the same information once again. On 2 May 2019 Armah responded, sharing copies of his P60 for the relevant years, although nothing related to the Gift Aid relief claims was supplied.

Lloyd sent a further request for more information in May that was not replied to until August 2019. At this point, Armah stated: ‘My accountant put in the recent claims…He made a mistake on the Gift Aid, as I have not made the contributions that I made previously, so please make the relevant adjustments.’

Armah continued to blame his accountant and tax advisor for the gift aid claims, explaining that he had not seen the tax returns as he ‘did not make the returns’. There were several back-and-forth engagements between HMRC and Armah, with the appellant repeatedly telling HMRC he did not understand HMRC’s findings and questioning why HMRC could enquire into tax returns completed years earlier as it was now 2021.

HMRC officer Lloyd said he had ‘thought of another way of explaining the tax position which will, hopefully, make things clearer’, explaining how the amendments to the returns had been made because Gift Aid relief had been claimed incorrectly.

The appellant once again said he did not understand and lodged his appeal in January 2022, saying: ‘I totally disagree with the reasons given and HMRC have told me about several different contradictory things through this process.’

Additionally, the appeal was lodged out of time, but HMRC and the tribunal allowed.

At the tribunal Armah was found to have not made any charitable donations at all during the years in question. In an email from Armah to HMRC in 2019 the appellant said: ‘The amounts were minimal and can be stating (sic) as zero for those years.’

However, during the tribunal hearing Armah claimed to have made charitable donations making him eligible for Gift Aid relief, although he did not produce any evidence of the donations.

Armah also tried to say that no tax returns were submitted for the relevant years, but this was also found to be fictional as in previous emails between himself and HMRC he refers to his accountant completing his tax returns. HMRC also produced screenshots of the completed tax returns.

Judge Caroline Small said: ‘We reject any suggestion by the appellant, made during the hearing, that he had in fact made charitable donations which would be eligible for Gift Aid relief.

‘No evidence has been provided by the appellant in support of that claim. Indeed, throughout the enquiry and up to this appeal hearing, no evidence in support of any eligible claim for Gift Aid relief in the tax years under appeal has been provided by the appellant.’

As for HMRC supplying ‘contradictory information’, it was found that HMRC’s ‘position had been consistent throughout the enquiry’.

Judge Small said: ‘We do not accept that this ground has any bearing on the issues that we need to determine. Even if the respondents had been inconsistent in their communications with the appellant – a contention which we reject – the closure notices were correctly issued.’

The appeal was dismissed.