The Joshua Foundation children's charity tax debt concerns raised

Leaflet from The Joshua Foundation
Image caption The Joshua Foundation provides trips, holidays and experiences for terminally-ill youngsters

Concerns have been raised about a long-standing debt to the taxman by a high-profile Welsh children's charity, a BBC Wales investigation has revealed.

The Joshua Foundation provides holidays and trips for terminally-ill children.

Their publicly available accounts show that the charity has owed between £300,000 and £400,000 to HM Revenue and Customs (HMRC) for over-claimed gift aid for a decade.

The HMRC debt has been on The Joshua Foundation's accounts since around 2003/04 - the organisation's founder Sarah Cornelius-Price says it is from mistakenly claimed gift aid.

Under the gift aid scheme, charities can claim from HMRC 25p from every pound donated to them, but must provide evidence of donations to qualify for the tax benefit, including donors' personal details, such as their address and postcode.

Martin Price, chair of the Institute of Fundraising Cymru, raised concerns about the debt for gift aid and other issues with the Charity Commission in 2009.

Mr Price said the turnover of the charity for the last few years had been around half a million pounds.

"The actual debt to HMRC is a substantial amount. To have built that up, that represents a donation to the charity of well in excess of £1m.

"What it means is that the charity claimed to have had donations from taxpayers for at least £1m, perhaps more, and wasn't able to substantiate that when HMRC came to do an inspection. Because they do, of course, come and inspect to make sure that the funds are being used properly and that claims are legitimate."

Mrs Cornelius-Price told BBC Wales: "We claimed for everything to do with the Oz Experience, our overseas expedition which is still our biggest income generator.

"And we were then told that you can't claim on something if someone gets a benefit out of it.

"So because the youngsters get to go to Australia, that meant that every claim we had made in regard to that then became negated."

Mrs Cornelius-Price, a trained lawyer and a former winner of the Welsh Woman of the Year award, said the charity's subsequent gift aid claims were being retained by HMRC towards offsetting the debt.

She hopes to settle the outstanding debt, which is about £300,000, soon.

The HMRC will not comment on individual cases, but said in a statement, "We work with charities to help them repay funds that are wrongly claimed under gift aid.

"We always look to work with taxpayers, including charities, with time to pay arrangements where it is appropriate. Enforcement action is a last resort."

Fundraising ratio

Meanwhile, accounts show that nearly 60% of The Joshua Foundation's income in the year 2010-2011 was spent on the costs of fundraising and running the charity; while 42% was spent on its charitable aims.

Mr Price said: "Looking at the costs of the charity, in the latest set of accounts something like 40% of the income is actually used for charitable purposes, which is a relatively small amount in comparison with other charities."

The Joshua Foundation says this is due to the nature of its Oz Experience, which challenges teenagers to raise funds for the charity in return for taking part in a trip to Australia.

Mrs Cornelius-Price said: "I think [the ratio] is as high as it can be, given that our biggest fundraiser remains the Oz Experience.

"The way the Oz Experience works is that youngsters raise a sum of money to go on a trip and 50% of that pays for the trip and 50% comes to our work.

"So we get 50p in the pound from that project… so we are working to reduce the dominance of the Oz Project.

BBC Wales looked at the fundraising ratios of more than 20 other charities in the course of the investigation. While the research uncovered other Welsh charities which spend less than half of their income on charitable work, The Joshua Foundation's 42% ratio was one of the lowest.

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