Looking back over several exchanges we have had with HMRC over the years, it sometimes feels that arguing with the Government about tax and Gift Aid is in our DNA here at Envelope Systems.
Adversarial though this may appear, our success is attributable in part to the quality of our relationship with HMRC, built over many years of working in the ‘charitable giving’ space.
As situations have arisen and problems overcome, so our understanding of how best to deal with HMRC has developed, including how it operates, and the forces working upon it.
HMRC personnel have been unfailingly helpful and keen to give consideration to our points whenever we have been in contact with them. However, they are constrained by policy decisions made elsewhere in the organisation. Part of the trick is to understand what to say to reach the real decision-makers.
Below we remember past occasions where we have challenged authority in the interests of our customers. Join us for a proud look at these triumphs, from which all charities using envelopes still benefit today.
Use-up time for Gift Aid envelopes. November 2015
Written Appeal and petition to HMRC
A surprise announcement was made in late October 2015 changing Gift Aid declaration wording. HMRC's previous required wording, introduced in 2012, was supposed to to ensure that charities and donors understood ‘without doubt’, what was required for a donation to qualify for Gift Aid. However, by 2015 it was considered that this hadn't been achieved and a new simplified version was required.
HMRC imposed a harsh deadline of 05 April 2016 for moving to the new wording, barely five months from announcing the change.
Thousands of our customers stood to incur costs of hundreds of thousands of pounds through being forced to throw out millions of perfectly good envelopes by this deadline.
After a week of listening to the anguish, Envelope Systems made a written appeal to HMRC, outlining the unfairness and the wastefulness of the deadline, and attaching correspondence from 2012, in which HMRC had agreed to make a special case for envelopes, allowing previous wordings to be used up.
It was accompanied by our famous ‘Stop Waste’ petition set up at the campaigning website, change.org. Victory came within 24 hours of the petition being launched on 04 November, by which time more than 700 treasurers and officers from churches and charities had signed.
New names were being added at more than one a minute when the announcement came from HMRC that churches and charities would be allowed to use up existing stocks on an unlimited basis with no deadline.
Use-up time for Gift Aid envelopes. March 2012
Discussions (earnest ones!) with Her Majesty’s Revenue and Customs
In late February 2012, HMRC announced new rules for Gift Aid declarations, requiring considerably more wording than previously. This was to make clear to donors and charities ‘without doubt’, what the requirements for Gift Aid were.
Another harsh deadline of 31 December 2012 was set for moving to the new declaration style.
Envelope Systems lost no time in appealing about this unrealistic deadline, pointing out the waste of millions of envelopes this would mean for the nation’s churches and small charities.
HMRC responded very helpfully as soon as this was made clear, and issued a key letter to us making a special case for envelopes and allowing stocks already purchased before the announcement to be used up.
This letter, issued on 23 March 2012, with the precedent it set down, was crucial to the subsequent success of our November 2015 campaign over use-up times for Gift Aid envelopes.
VAT on collection envelopes. January 1998
Formal Appeal to the VAT and Duties Tribunals.
Page one of our 1998 VAT appeal
This was a case where this battle was lost but ultimately the war was won.
In those days, Her Majesty’s Inland Revenue and Her Majesty’s Customs and Excise were separate. Gift Aid as we know it had yet to be introduced.
We took a case to a VAT Tribunal over the zero rating of collection envelopes, which we felt should be allowed.
Our case was heard in London by the then President of the VAT and Duties Tribunals, Stephen Oliver QC, now Sir Stephen Oliver.
We argued unsuccessfully that the law, which allowed zero-rating for ‘advertisements and similar publications’ could be construed widely enough to cover envelopes. This was especially as they were ‘for the purpose of raising money for the charity’, if not, ‘for the purpose of making known the objects or reasons for the objects of the charity’.
These are all phrases which appear in the relevant piece of legislation.
We were supported by the then Christian Stewardship Officer for the Church of England, Robin Stevens, who gave evidence.
The solicitor for the Customs Commissioners argued that our envelopes did not fall into any of the categories of publications that could qualify for zero rating and neither could we be said to have supplied an advertisement or goods or services in connection with the preparation of one.
Although our appeal was dismissed, Stephen Oliver did refer to the clear and well presented arguments we had put.
The following year, new legislation was drafted introducing Gift Aid as we know it today, with scope for the first time to claim tax back on any donation from a taxpayer, as long as it was accompanied by a Gift Aid declaration. This was a far easier alternative to the previously cumbersome covenants.
We don’t think it’s a coincidence that along with this legislation came a concession from the Commissioners that envelopes used in connection with Gift Aid would benefit from zero rate VAT as of 06 April 2000, the same day Gift Aid was introduced. We had lost our appeal but the message still got through.