The Institute of Economic Affairs (IEA) has accused leading charity Oxfam of using Gift Aid for tax avoidance, in a controversial online article which argued that using Gift Aid to transfer profits between subsidiaries was “an ingenious way to escape a tax liability”.
The right-wing think tank also argued that claiming Gift Aid on donated goods was “an artificial structure to gain a tax advantage”.
The comments come shortly after the controversial body urged the Government to “crack down on charitable campaigning” and questioned charities’ right to criticise tax havens.
“Business done through tax havens is perfectly legal (except perhaps for occasional errors, which those involved carefully seek to eliminate) and there is nothing wrong with it. But that is not Oxfam’s view; it is a strange philosophy that condemns actions in others whilst busily engaging in them oneself,” said the article, entitled Oxfam on tax avoidance: do as I say, not as I do.
“Use of artificial transfer pricing to gain a tax advantage is the sort of thing that various charities have condemned when used by commercial businesses; it weakens their position to be using the same techniques themselves,” it added.
John Hemming, chair of the Charity Tax Group argued that the IEA’s comparison was “unfair”.
“Oxfam are using the rules exactly as intended. The same can’t be said of people who use tax havens.
“The point with both of these arrangements is that they are agreed, sanctioned and promoted by HM Revenue & Customs,
“The tax guidance for charities contains sections explaining how to do it,” he said.