A registered educational charity is a member of an EU "Horizon2020" consortium. The charity relies on unpaid services of its trustees and other volunteers, and the EU grant is calculated on the notional value of their work. The European Commission requires detailed record-keeping, which would normally include evidence that workers have actually been paid for their time as recorded on time sheets.
However, actual payments would require volunteers to complete self-assessment forms and pay tax on such payments - and also would fundamentally alter the relationship between volunteers and the charity. Even if they donate the payments back to the charity, this would require operation of Gift-Aid. Altogether there would be an administrative burden on both volunteers and charity, whose accountant also provides his services free of charge.
Would it be valid to avoid all this hassle by including a tickbox at the bottom of each time sheet with some such wording as "Please credit the full amount to the charity's volunteer donation fund", next to a space for the volunteer's signature? This is even more important for the trustees, who might well fall foul of Charity Commission regulations if they receive such payments.
Replies (5)
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I wonder if the tax tail is wagging the dog here.
Is the purpose of the grant so that workers can be paid for their services who would otherwise be unpaid? The fact that the grantor requires evidence of actual payment strongly suggests this. What limitations on the uses to which the funds can be put do the grant conditions contain?
So there are no restrictions on the use of the funds - which is good.
But why then does the grantor want evidence of actual payment? And are you sure there no adverse consequences if you do not provide that evidence?
PS (EDIT)
Or to put it another way, you are not going to be able to provide evidence of actual payment unless there are actual payments. But you say that it is the wish of all concerned that no actual payments shall be made.