Our Auction facilities allow charities to handle auctions.

The Gift Aid aspects of auctions are notoriously complex and a great many charities make mistakes. The PureCharity facilities are designed to help charities comply with tax regulations by ensuring much of the paper-work is produced as required.

The system is not designed as a replacement for online auction sites, such as eBay. Read the following section on "How it works" to see how the systems differ.

How it works
The facilities allow charities to add unlimited items to their auctions, with pictures of each item if required. The items are available online for people to look at and bid for. If someone has bid and a higher bid is made, they are notified by email and invited to increase their bid. The charity gets notified by email each time someone makes a bid for any item.

Unlike other auction sites, the bidder is not able to pay for the goods online. The system is designed for charities who have physical auctions to allow people to pre-bid for items. The charity has absolute discretion about whether to accept an online bid. Circumstances where a charity may prefer to reject an online bid that exceeds a bid put in at the physical auction include a bidder unknown to the charity and from whom the charity are not in a position to judge whether payment and collection will be made.

An "Auction pack" is produced by the system to print out. This lists every item available for auction, together with online bids, details of the seller where the seller's details are needed for gift aid purposes and boxes for the buyer and/or seller to sign as appropriate. The system highlights who needs to sign the boxes once the successful bid has been accepted. The pack also provides a statement that needs to be read out to bidders at the start of the auction.

Once a bid has been accepted, the charity can organise for the buyer and/or seller to sign the pack, as required for Gift Aid purposes.

After the auction, the charity can enter details of the accepted bids and tick the relevant boxes on the system. The system then calculates how much Gift Aid is available on each individual bid, depending on the circumstances.

Although Gift Aid on auctions is complex, the "Auction Pack" is a simple form with clear instructions about what boxes to fill in and which signatures to obtain. The rest of the complexity is dealt with by the system.

How to set up an auction
1. Go to Members Home -> My Fund-raising -> New Fund-Raiser.

First you set up the auction. Then, once the activity is set up, you add items for auction. Additional items can be added at any later date, as required.

2. To set up the activity:

Enter details of the Fund-raiser (eg. "The ABC Charity Auction", "Auction for Better Vision" or "Members Auction on 25th March"). A couple of pointers are set out below.

2.1 Under "Type" select "Auction"

2.2 Select whether you want members of the general public to see this activity. If the event is not open to the general public, you may prefer to set it as "Invisible". If the activity is not visible to the general public, you will need to send a link to the people who you do want to visit.

2.3 Click the "Post Details" button when are ready.


Once you have set up the activity, you need to set up details of each item for auction.

3. To set up details of the items:

3.1 Click the "Add Item" link.

(If it is not on the page you are at, you can find it at:
Members Home -> My Fund-raising -> Fund-raisers : then select the Fund raiser (which takes you to -> Fund-raiser Home)

3.2 Enter the auction item's details. Since the tax situation can be complex, there are some simple notes below to take account of:

(This paragraph is only for those who want to know why there are so many strange boxes to fill in. Jump to the following paragraph is you are not interested. The item may be owned already or bought by the charity. Often, the item is donated by an individual or a company. Sometimes the item can be valued objectively, such as where it is sold in shops or is a cash voucher. Sometimes, people pay over the original cost of the item because it has rarity value. Sometimes, people pay over the odds because they want to support the charity, so the bid contains a clear element of donation. Sometimes, the bidder makes a Gift Aid donation, other times it is the seller. The pointers below should help handle all the different options, each of which has relevance for tax purposes).

3.2.1 Basis: Where the item is owned by the charity or is donated by a company or someone who does not pay UK tax, it is probably in the charity's interests to select to treat the item as a "simple sale". If the item being donated by an individual who is willing to donated the sale proceeds to the charity and for the charity to claim Gift Aid on the allowable portion, it is probably better for the charity to select to treat the item as "Complete Gift" (which the Inland Revenue calls "Agency Basis").

3.2.2 Market value : You can enter the actual or estimated market value to give bidders an idea of what the value of the item is.

3.2.3 Established market value : This is a special condition with tax consequences if set to "yes". This question is designed to ask whether there is an independent and certain market value for the item. Where an item is currently being bought by the general public in retail outlets or is a cash voucher, for tax purposes, its market value is known with certainty. Where an item has been valued by a professional valuer but is not available on the open market, or where there is no open market for the item, then for tax purposes, it does not have an established market value. This distinction is important where bidders pay above the established market value, because Gift Aid is available in certain circumstances.

3.2.4 When you are ready, click the "Post Details" button.

Repeat this process for every item available for auction.

The day of the auction
Immediately before the auction, you should print out the "Auction pack". There are clear instructions with a statement you need to read to bidders at the start of the auction, a list of each item available for auction, details needed for Gift Aid purposes and boxes to be signed. The Pack sets out exactly what you need to do.

To download the pack, go to Members Home -> Fundraisers -> Select the auction -> Auction Paperwork


After the auction
Gift Aid can be claimed only where payment is made and either the buyer or seller (as indicated by the system) has signed the box in the Auction pack. (Even then, Gift Aid may not be available in certain circumstances). Where signatures and payment are received in dribs and drabs, the system is comfortable to receive information as and when you get it. If the information is entered over a period of time, care needs to be taken to ensure Gift Aid is claimed in the correct period.

The system will decide whether, based on the information entered, Gift Aid is applicable.

To enter the final information on which system basis its calculations, go to Members Home -> Fundraisers -> Select the auction -> Auction Results


Limitations
This is designed as a quick a easy facility for charities who run physical auctions. It is not designed as a fully fledged auction system. In particular:

The system does not allow final bids to be accepted online. Similarly, it does not allow bidders to pay online for a successful bid. The system has no facilities for distribution of successful bids. Payments and distribution must be arranged by the charity directly with the successful bidder and/or the seller.

The system does not cater for VAT. For charities that are VAT registered, they must issue a formal VAT invoice outside the Pure Charity system in respect of each item sold.

Given the complexity of the regulations for Gift Aid and auctions, charities should always consult with their professional advisors for confirmation that the Gift Aid claimed on auctions complies with the appropriate regulations before it is claimed. This applies equally to Gift Aid calculated by the PureCharity website.