Hi we have been approached by a registered charity to do some work at a grossly reduced rate, are there any tax advantages for doing this ?
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And....
The hope that somebody on the board of trustees might think of you when some more lucrative work comes along.
Beware of your regulators
They do not like reduced fees for charities. They assume that a proper job is not being done
Regulators?
I'm in schtuk then as I do work for charities where I deduct the number I normally charge from the fee I don't get!
Who is to say what reduced fee is?
@op@memyself-eye
I meant your regulators - not the potential clients .
The accountancy regulators get sniffy if you charge less than you would do normally especially if it is an audit. Even for an independent examination they would,I think, get sniffy if you did the work for a discounted rate.
my regulator
Is HMRC.
To whom I pay the exorbitant sum of £120 a year to have the dubious honour of being allowed to work and pay tax.
Soon no doubt, they'll be dictating the fees I am to charge and will (I'm sure) recompense-or more likely penalise - me when I lose business as a result.
That's 'regulators' enough for me.....:)
@memyself-eye
If your regulator is HMRC presumably that means you are regulated by them merely for MLR and by nobody else. For certain ICAEW bods take a dim view of discounted rates for charities. I suspect,therefore, you have nothing to fear.
@pub landlord
I agree with what you say about ICAEW regulators (although they've never raised it with us, oddly). Would the answer be to charge in full and then make a donation?
@TerryD
They haven't raised it with us but I am aware of one firm where they got extremely sniffy.
Is it only ICAEW - and real reason why?
Clearly ICAEW's attitude could be disadvantageous for charities - but good for HMRC (*) and competing accounting firms who are not so charitable!
I suppose a work around to keep the ICAEW rubber sole brigade "off the scent" is to charge fuller fees and then (don't tell ICAEW!) gift aid the desired discount to the charity.
But this has disadvantages:
(*) Extra VAT costs on fees a non-recoverable cost to most charities.
(*) Extra class 4 NIC costs for unincorporated entities / taxpayers
Is this just an ICAEW thing? It could be construed (or misconstrued) as market price rigging under the flag (excuse) of "maintaining standards".
PS. My teenage son does a four-figure number of unpaid hours work each year for a charity, thankfully his work is NOT regulated by ICAEW! No question about "maintaining standards" issues arising from my son's dedication to charity.
I can't see how....
I can't see how it's anybody's else's business other than the client's and the accountant's what fees are charged for a particular case. This is surely a simple matter of an agreement made between the two of them.
If regulators are going to get sniffy about reduced fees for charity work are they also going to get sniffy if you give a discount for a relative or for a client of modest means?
The reason they get sniffy about these things is because it could impact on our independence. They would get very sniffy indeed if we did an audit, or any kind of independent report, at a reduced fee for a relative!