HMRC has published the latest developments on the Gift Aid tax avoidance scheme known as Project 2010.

The Gift Aid rules allow charities to claim a repayment of tax on qualifying donations of money by individuals. Donors who pay higher and additional rates of tax can claim tax relief on the difference between their marginal rate of tax and the basic rate of tax.

Project 2010 is, in HMRC's view, a scheme designed to exploit these rules and the previous spotlight on ‘Gift Aid with no real gift’ explained how avoidance schemes like Project 2010 were structured. HMRC said that they would challenge the use of this scheme and would litigate where appropriate.

HMRC is now preparing to take legal action against those who have used the scheme, but will first contact the remaining users of this scheme to invite them to reconsider their position and let HMRC know if they wish to withdraw their claims.

By way of reminder, ‘Spotlights’ warns about certain tax avoidance schemes which HMRC believes are being widely offered to help those using them to avoid tax.