North Yorkshire Moors Railway General Discussion

So everyone who has gift aided can expect guided tours of all the sheds and scrap(sorry storage )sidings to view ALL the work of the charity ?

 

No because delay repay only is claimable for a train or trains you actually travelled on. Currently you can claim for up to 28 days for a refund after a journey you did not take, either due disruption or a change of mind.

 

Genuinely, I can’t find a clause in the regulations that allow it to be annulled because the charity decides it wants to do so in order to convert the nature of the transaction. And even if it did, you would presumably have to comply with the charity guidance on the return of donations? The circumstances I have found for treated the declaration as not made are basically about it being invalid declaration. I may not being seeing it though.

 

Yes, because there has to be a means by which a declaration, once given, can be removed where the donor was ineligible to Gift Aid their donation. A very simplistic example. If I give £100 in May, believing that I’ll pay Income Tax and/or CGT of £25 in the tax year, and then find the my circumstances change so that my total tax for the tax year is actually nil, there has to be a way of reversing the declaration. But that is about the interaction between the annual tax account that is the basis of personal taxation, and my personal tax circumstances. It’s nothing to do with a change of heart, and certainly not for the purposes you describe.

You are being misled into sleepwalking into an HMRC investigation that cannot but cost dearly by your prioritisation of consumer law principles in an area where they simply don’t apply. The tragedy is that you are doing so in pursuit of a reasonable outcome by trying to apply a mechanism that is questionably applicable to heritage railways, and where as an organisation you have many other ways of achieving the same objective at the same minimal cost.

NYMR are as far as I can tell unique within the charity sector in treating donations this way. That should be a red flashing light that you’re putting yourselves in an extremely exposed position.

NYMR need to talk urgently to tax professionals about what you are doing, and to get detailed advice on its lawfulness. The alternative is likely to be finding yourselves making a Serious Incident Report to the Charity Commission because you’re subject to an HMRC investigation, blocked from use of the Gift Aid scheme while it’s underway, and then subject to penalties for abuse.

 

the word ‘clearly’ is carrying out a serious amount of heavy lifting here, when it is an interpretation that seems to be clear to one person in the discussion..

 

A footnote to my post #8746. I believe that the risk run by NYMR can be quantified as being a full rebate of all Gift Aid payments made in connection with fares since the delay repay arrangements were introduced, plus interest, plus penalties at whichever scale HMRC are entitled to levy them. That is on top of professional fees and disruption costs during the period of investigation.

This interpretation is on the basis that any and all Gift Aid claimed under the current terms and conditions was not on donations, but commercial payments, and therefore was ineligible to be claimed as Gift Aid.

 

In other news the previously free Grosmont webcam is now behind the pay per view scheme, however a new free (for now?), Goathland webcam has appeared.

Will be interesting to see how many subscribe, not aware of any other heritage line charging, ELR and KWVR have several free cameras along the line.

 

I get the impression, perhaps mistakenly, that there's a dislike by some of the concept of heritage railways recovering Gift Aid on fares. There also seems to be reluctance to recognise the application of the Consumer Rights Act to their services. Perhaps that's encouraging harbingers of doom who would like to see both being found to be unworkable or inapplicable. Draconian conclusions are being drawn based on little more than personal opinion. Of course the NYMR has taken advice from tax professionals on which, with all due respect, it places greater reliance than opinions expressed on here.

 

I don’t think anyone doesn’t want gift aided to work. Nor do I sense a desire to suggest that consumer protection doesn’t apply to heritage railways. The question is whether delay repay can apply to access rights granted as a result of a donation.

This is an interesting and important discussion. I spent a bit of time reading guidance last night, as a result. It seems to me that at the point where you decide to donate you make an irrevocable decision from a tax and charity law perspective, but also from a consumer perspective. By deciding to donate you are by definition giving to the charity concerned and give up your consumer rights and receive a new right to view the work of the charity. At that point you are no longer eligible for any form of refund. You may have other rights, but not that one.

 

From some, possibly. But I have long thought that Gift Aid is a useful adjunct to fundraising, administer it myself, and have some experience of working alongside HMRC. I am also a strong supporter of schemes like Delay Repay or EU261 for public transport.

My views are those of a layman, but based on reading the Gift Aid rules, and knowledge of how HMRC work. That is why I draw the conclusion about the risk I assert in posts 8746 and 8748 above.

If (and I genuinely hope this does not happen) NYMR are subject to review by HMRC, any case you make will be subject to tax law, and escalated through the Tax Tribunal system. Consumer legislation simply won't get a look in under that structure, unless the case is elevated to a point where a judge needs to bring the different strands of law together. That means the High Court, and quite likely a run all the way to the Supreme Court for a ruling on the compatibility of the different legislation.

So much for the "formal" view. Politically, I think that such a run of cases would be deeply damaging to the charity sector as a whole. It would make the Gift Aid system high profile, and put into political debate. For those (including some posters on here), who see it as a "loophole", it would offer up additional revenue "needed" by the Treasury, and invite restrictions. That would, at best, cause reversion to the previous "Deed of Covenant" system, and undermine the intent of one of Gordon Brown's most important policy changes.

Finally, I note what you have not said. You have not stated that HMRC have confirmed the interpretation you place on this, and you have not stated that the opinions of those tax professionals actively support the interpretation you've advanced. I suspect, with some experience of working with professional advisors myself, that those advisors have stated that you have an arguable position, and possibly provided a view of the odds if it were contested.

As a charity trustee, with legal duties to the well-being of the charity, I would not put "my" charity at that risk when there are other ways of achieving the same end that don't create the flagrant conflict between the scheme rules and the charity's T&Cs.

 

Sorry, but this sounds like an outburst from a sulking child in response to criticism.

 

To a large extent I agree but as you say in electing to make a donation you acquire the right to view the work of the charity. The 2007 Income Tax Act mentions specifically a right of admission. If there's a right there's a corresponding obligation (otherwise it could be a case of "thank you for your donation but you still can't travel on our trains." All the essentials of a contract to provide a transport service are there. Does the 2007 Act change the basic laws of contract? I very much doubt it!
Where a donor has elected to make a Gift Aid donation and receive the right of admission and travel in return any demand for a refund would be met with confirmation that it's not available becuase the passenger elected to make a Gift Aid donation. As you acknowledge there is provision in the implementing regulations for a Gift Aid declaration to be treated as not having been made where it is no longer a Qualifying Donation. If the passenger elects to exercise the right to a full or partial refund as mandated by the Consumer Rights Act the donation would no longer be a qualifying one and no Gift Aid recovery would be possible. That practical resolution of the inherent conflict between the 2007 Act and the subsequent Consumer Rights Act is relatively straightforward.

 

It is in this latter part that you move from basically reasonable to thoroughly speculative, because you are assuming that, as a donation, the laws of contract apply so strongly that rights to refund under consumer and contract legislation override tax law.

I administer Gift Aid. I have very occasionally had to retrospectively change the status of a donor, and hence qualifying donations, because their circumstances do not permit them to make qualifying donations. I have also, on a couple of occasions, had to refund donations because the capacity of the donor to give has been challenged. I forget whether Gift Aid was involved; I would have adjusted my Gift Aid claim in those circumstances.

What these instances, and the Gift Aid regulations, do not suggest is that the donation can be conditional - it must be absolute and irrevocable at the time that it is made; the Gift Aid declaration is independent of that.

I may agree with you that, in this instance, the law is an ass. That doesn't make the legal provision invalid, and I am really surprised that, with other straightforward means of addressing the important issue of consumer rights and customer trust, you are digging in so robustly to defend such a weak position, especially where it makes your own T&Cs self-contradictory.

 

I still don't see how you get round the statement in the guidance that "It’s most important that the terms and conditions attached to an admission fee do not include a right to a full or partial refund of the admission fee." So the point at which you are at fault started the moment you included that clause in your terms and conditions.

Essentially, you seem to be arguing around a technicality that, because in principal there are circumstances in which a donor can ask for previously-agreed Gift Aid to now not be collected, then that gives you an administrative loophole whereby you can simultaneously obtain Gift Aid from those passengers whose day ran to plan, but can also offer a refund to those who suffered disruption. But your problem has started much earlier than that: you are in breach of the terms of offering a Gift Aided admission the moment you attached terms and conditions that gave a right to a refund. You don't have to actually ever have given a refund in practice - the mere fact that you have offered to do so means you are breaching the regulations.

Tom

 

There's at least one ex HMRC person following this discussion and it is interesting to see which posts he has liked.

Before anyone asks, I'm not giving names away.

 

Tom, The flaw in that line of reasoning is that it assumes that the possibility of a full or partial refund is created by the Terms and Conditions. That's not the case. In fact what they do is attempt to limit a right that exists by virtue of the Consumer Rights Act. If they were silent or said " No refunds" (as some do) that wouldn't change a passenger's statutory rights. There is an inherent conflict between two pieces of legislation that has to be resolved pragmatically in a way that ensures that if a Qualifying Donation stands no refund is possible.

 

I don’t see a general provision for the donor to change their mind either in Charity Law or the guidance around gift aid. The only circumstances under which a declaration no longer qualifies are related to a change in tax circumstances or the discovery by the trustees that the donation was invalid. They made a donation.
That’s irrevocable. They can receive no refund, that’s explicit. I would submit that the inclusion of a right to view in the income tax bill is an acknowledgment by parliament that otherwise the donor would have no rights whatsoever. You cannot be both donor and consumer. When you elect to be the first your rights as the second must expire.

 

So the NYMR now has Schrödinger's Gift Aid?