The NAO said that while Gift Aid was an “important source” of funding, worth £1bn or 2% of charities’ income last year, there was not enough evidence to show that relief on donations provided enough value for the sector.
It added that HMRC only had a “crude” estimate of £170m for the amount of tax lost through avoidance, fraud and error for 2012-13, which may be an underestimate.
The NAO said that while donors needed to have paid tax for charities to claim Gift Aid, HMRC may be paying a further £55m in error where the donor has paid insufficient tax to allow the charity make a claim.
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