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Personal Tax: Spotlight on Gift Aid

Personal Tax: Spotlight on Gift Aid

HMRC announced its intention to challenge tax reliefs claimed in connection with an avoidance scheme exploiting the Gift Aid rules and to 'litigate where appropriate'. Spotlight number 9 at www.hmrc.gov.uk/avoidance said the scheme seeks to exploit the rules enabling a charity to claim a repayment of basic rate tax on a qualifying donation made by an individual.

'The scheme depends upon a circular series of payments. It starts with the charity purchasing say gilts of £100 000 which pass through a third party to an individual taxpayer for perhaps £10. The taxpayer is expected to make a sale for £100 000 and pass the money to the charity. There is an option that ensures the gilts will be returned to the charity if it does not receive a cash gift of £100 000 within one or two days ' HMRC...

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