Clark Brownscombe - Chartered Accountants, Registered Auditors, Tax Consultants, Business Advisors Clark Brownscombe - Chartered Accountants, Registered Auditors, Tax Consultants, Business Advisors
Chartered Accountants, Registered Auditors, Tax Consultants, Business Advisors

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Thursday, 24th April 2014

INTRODUCTION

 

Despite the forthcoming cuts to its budget and staffing, the Charity Commission has produced a significant amount of new and updated guidance over recent months.  In this newsletter you will find reference to their work on:

 

  • Insurance
  • Equality Act
  • Video Tutorials
  • Excepted and Exempt Charities
  • Small Charities
  • Protecting charities from harm
  • Charities working internationally
  • Managing charity assets and resources

 

There are a number of tax updates together with a round-up of other issues relevant to charities. 

 

CHARITY COMMISSION NEWS

 

Charities and Insurance

 

CC49 has been updated and explains that insurance can form part of the charity’s solution to managing risk.  The guidance lays out a series of questions in helping trustees decide whether to buy insurance in respect of a particular area of the charity’s operations.

 

http://www.charity-commission.gov.uk/Publications/cc49.aspx

 

Equality Act

 

More detailed guidance has been published focusing on the charities’ exception in the Act.  This exception allows a charity to limit its benefits to people who share a protected characteristic if the restriction is based on the needs or disadvantages experienced by that group, or can be justified as a fair, balanced and reasonably necessary way of carrying out a legitimate aim.

 

For more details go to:

 

http://www.charity-commission.gov.uk/charity_requirements_guidance/charity_governance/good_governance/charities_equality.aspx

 

Video Tutorials

 

The Charity Commission have produced video tutorials to help charities file their Annual Returns and update their details online.  Three videos have been produced for different income bands between £10,000 and £500,000.

 

http://www.charitycommission.gov.uk/RSS/News/pr_ar11.aspx

 

 

 

Excepted and Exempt Charities

 

Updated guidance has been produced and is found at:

 

http://www.charitycommission.gov.uk/Start_up_a_charity/Do_I_need_to_register/Excepted_charities_index.aspx

 

Small Charities

 

The Charity Commission has dedicated a section of its website to guidance for small charities.

 

http://www.charity-commission.gov.uk/Charity_requirements_guidance/Specialist_guidance/Small_charities/default.aspx

 

Under the section ‘Avoiding problems (‘risk management’)’ there is a useful set of 10 questions for avoiding problems which any charity would perhaps benefit from running through at a forthcoming trustees’ meeting:

 

http://www.charity-commission.gov.uk/Charity_requirements_guidance/Specialist_guidance/Small_charities/Avoiding_problems_in_running_your_charity.aspx

 

Protecting charities from harm

 

This online toolkit covers:

 

  • Charities and terrorism
  • Due diligence, monitoring and verification of the end use of funds
  • Fraud and financial crime
  • Holding, moving and receiving funds safely in the UK and internationally

 

Comprehensive guidance is given under each of these headings and is particularly relevant for charities operating internationally.  Various checklists and proformas are to be found in this helpful area of the Charity Commission’s website. 

 

http://www.charitycommission.gov.uk/Our_regulatory_activity/Counter_terrorism_work/protecting_charities_landing.aspx

 

Charities working internationally

 

Again comprehensive guidance is available covering registering such charities, financial issues, staff matters, reporting and monitoring, risk, legal requirements and sources of information:

 

http://www.charity-commission.gov.uk/Charity_requirements_guidance/Your_charitys_activities/Working_internationally/Charities_working_internationally_index.aspx

 

Managing charity assets and resources

 

This is another document which could form part of a review at a trustees’ meeting.  There are 12 areas covered (each has one page of guidance) including such matters as financial controls, reserves, investing, trustees expenses and payment, and trading. 

 

To find CC25 go to:

http://www.charitycommission.gov.uk/Library/guidance/cc25text.pdf

 

TAX UPDATE

 

Gift Aid

 

A number of matters here:

 

1.        Schools – HMRC have produced a new guide ‘Gift Aid & Payroll Giving - a reference guide for school charities’.  Of particular interest are the various ‘scenarios’ relevant to schools and gift aid covering fees, appeals, trips, auctions and donations. 

http:// www.hmrc.gov.uk/charities/gift_aid/rules/school-charities-ezine.pdf

 

2.        Transitional relief – this ended on 5 April 2011. 

 

3.        Small donations – from April 2013, charities will be able to claim a gift aid equivalent for all donations of £10 or less without the need for the donor to complete any paperwork.  This is however limited to an annual claim of £5,000 of such donations, but is still worth £1,250 in gift aid recovered.  A charity must have been registered with HMRC for gift aid purposes for at least 3 years and have operated gift aid successfully throughout this period with a good record. 

 

4.        Benefit limits – from 6 April 2011 there has been an increase in the maximum value of benefit from £500 to £2,500. 

 

Inheritance Tax

 

The 2011 Budget proposed a reduction for inheritance tax on estates which leave legacies to charities totalling 10 per cent or more of a deceased’s net estate.  The proposal is to reduce inheritance tax from 40% to 36% in such cases.

 

We are now awaiting final proposals following a consultation period and it is expected the new rules will apply to deaths after 5 April 2012. 

 

Substantial donors 

 

New and clearer rules have been introduced following this year’s Budget.  The ‘Tainted Charity Donations’ rules will apply where a donor enters into an arrangement, the sole or main purpose of which is to obtain a financial advantage. 

 

Should a transaction be caught under these rules and as long as the charity is not part of the arrangement, any basic rate tax claimed by the charity will not be repayable to HM Revenue & Customs.  Rather, HMRC will pursue the donor for repayment of all tax relief obtained. 

 

VAT

 

Overseas payments

 

HMRC has stated that if organisations fail to take whatever steps HMRC consider reasonable to ensure that funds are used for charitable purposes, then overseas expenditure could be considered non-charitable and therefore liable to tax.  Another reason for charities operating internationally to ensure that they read the Charity Commission guidance for international charities referred to above.

 

http://www.hmrc.gov.uk/charities/guidance-notes/annex2/annex_ii.htm

 

OTHER MATTERS

 

CIO’s

 

We thought that the wait was over.

 

Charitable Incorporated Organisations are not now going to be available until the first quarter of next year. At the moment, that is. One begins to wonder if this will ever happen, and if so for whom such a structure will be relevant.

 

Bribery Act

 

The Bribery Act came into force in July 2011.  You can find a government produced ‘Quick start guide’ at:

 

http://www.justice.gov.uk/guidance/docs/bribery-act-2010-quick-start-guide.pdf

 

A guide for NGOs, particularly those with international operations, is available at:

 

http://www.bond.org.uk/data/files/Bond_Anti-Bribery_Principles_and_Guidance_for_NGOs.pdf

 

Music Licensing

 

Prior to 1 January 2011 not-for-profit organisations were exempt from paying public performance fees to PPL, the music licensing authority.  A licence is now required for any use of recorded music for public performance, though for certain organisations no fees will be payable until 1 January 2012.

 

For more information go to:

 

http://www.ppluk.com/en/music-users/Information-for-Charities/

 

Breakthrough Thinking for Nonprofit Organisations

 

This is an excellent book, which contains a range of useful ideas and approaches to leading and developing nonprofit (or for that matter all types of) organisations.  We shall be producing an extract and if you would like a copy, email jogiles@cbhove.co.uk

 

Alternatively, available from Amazon at:

 

http://www.amazon.co.uk/s/ref=nb_sb_noss?url=search-alias%3Dstripbooks&field-keywords=breakthrough+thinking+for+non+profit+organisations