After hours play school

After hours play school

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I have been asked to prepare accounts from basic records maintained by treasurer

Initial verbal enquiries indicate that there is no constitution or any other document establishing how the club was started,how it is operated and no minutes of meetings.The group has not obtained charitable status.I am advised that the group is run on a "not for profit basis"

A payroll scheme has been registered with HMRC.No approach has been made to HMRC re "trading status".

I realise that my letter of engagement will have to be strictly tailored to the instructions given.

I would appreciate any advice as to a general approach to acting for the prospective client and particularly with regard to paras 2 and 3 above. 

Replies (7)

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the sea otter
By memyself-eye
16th Feb 2011 10:55

Treat it as though it was (were?) a charity

and produce income and expenditure accounts as per the Charity Commission's template which you can access via their web site.

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By Chris Smail
16th Feb 2011 13:10

How big is it?

I was reminded recently that if turnover is under £5k then cannot register with Ch Com.

Otherwise I would strongly recommend that they form a CLG & register with Ch Com in future. Meanwhile, as above, assume that are a as yet unregistered charity and carry on. Make absolutely certain you are clearly providing them with a service and are not part of the management group.  

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John Toon
By John Toon
16th Feb 2011 15:19

What is the group?

I would tend to agree with the above replies, but you have thrown in the words club, and payroll scheme which could cause issues!

Firstly you need to establish who you are acting for - is it a club? or is it a not for profit association (ie charitable)? Depending on the answer will depend on how you would prepare the accounts.

Secondly - if a payroll scheme is in operation you need to check that if this is a charitable association that no one held out to be a trustee is being remunerated because you need charity commission approval!

Also if there are employees - without a constitution who do the employees actually work for? The charity commission's standard recommendation is for charities with employees to go down the incorporation route because then you would have a legal identity and the potential cover of limited liability.

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By Richard Willis
16th Feb 2011 22:21

I thought that I had already contributed to this thread!

Apologies if this turns up twice.

Such clubs,(I used to be chair of one) are regulated by OFSTED.  If the principals have circumvented the usual setup procedures they may well have evaded detection by OFSTED and would, therefore, almost certainly be acting illegally.  Tread very carefully!

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By neileg
17th Feb 2011 09:47

Not for profit is not a recognised tax status. If such an organisation makes a profit, it's taxable unless you can claim something like mutual trading.

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By jpcc1
18th Feb 2011 11:47

Charity or Not ??

 

If it has purely charitable objectives, then it’s a charity - whether its registered with the Charity Commission or not. And if the income is over £5k then it should register.Get them to draft a constitution, or better still incorporate (limited by guarantee as Chris suggests) with clear objectives, so it’s clear whether it’s a charity or not. If it’s not, then there’s a bigger potential tax liability.If it is, then accounts should be kept in compliance with the SoRP. However if the annual income is less than £250k these can be prepared on a receipts & payments, rather than an accruals basis. Either way it will need an Independent Examination.Whoever is running the show are de facto trustees at the moment and will have a duty of trust for the funds collected. Any payments to these individuals as trustees could be authorised by the new constitution (but not retrospectively?). As also suggested OFSTED may be interested (and Companies House if they do incorporate) (and HMRC) (etc) (so much for cutting red tape – bring on the CIO)

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By Lords
18th Feb 2011 12:09

After Hours Play School

Many thanks for all of these very helpful replies

I am shortly to meet with the Treasurer and will obtain more information.

I reserve the right to post follow up queries!!

 

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