Hi
I am treasurer of a new organisation which is not a registered charity but is a Community Benefit Society. We have raised £18k from a crowdfunder and that has just been matched by an unexpected extra £18k donation.
As far as I understand we're looking at a significant tax bill at the end of the year. This article explains that grant income can be deferred until it has been spent for it's intended purpose. While we have assigned our own intended purpose, and have stated that to the funders before they donated, neither grants come with anything you could call conditions.
So, what do people think- will we be able to defer this grant income? I will get the 'real' answer from the auditor at the end of the year, but I would like to know now if the answer is going to be no.
Malcolm
Replies (34)
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Why not ask the auditor for the 'real' answer now, as presumably they will know the full circumstances which answering here will, inevitably, require a number of assumptions or further questions?So, what do people think- will we be able to defer this grant income? I will get the 'real' answer from the auditor at the end of the year, but I would like to know now if the answer is going to be no.
Not usually an audit
REALLY check the rules
Audits are very expensive.
https://www.uk.coop/sites/default/files/uploads/attachments/society_annu...
If you need an audit appoint now as urgency
Because auditor needs to plan and you need to prepare risk assessments.
An audit is not just give everything to accountant a couple of months after year end
Ok.
Any insights on deferral of grant income?
I for one vote no. Assuming you're absolutely entitled to it.
But your auditor will have his own view. If you don't follow it, he may well decide to qualify his report. Which you probably won't want to happen.
You need to discuss it with him.
Largely agreed, though the terms of the crowd funder/fundraising appeal may make a difference. But on the basis that (a) this is a trading company (b) not a charity (c) has received the money and (d) can spend it as they see fit, it is recognisable and taxable on receipt.
Has anyone looked to get charity status with HMRC?
I had a Friendly Soc that qualified, FCA regulated.
If a genuine benefit to community, not for profit then start that process.
Why on Earth are you having an audit?
Or is it a misuse and you mean accountant?
Answered above
Hi paul. As a bencom we are registered with the FCA (not companies house or charity commission) and they require accounts to be prepared by an auditor. I am doing bookkeeping using xero in advance of them doing this to hopefully save money.
You'd probably have saved a lot more money by registering with the Charity Commission, either as a charity or a CIO.
No need to defer that £18k. You can put it towards the audit fee.
Once you get the bill, you'll probably find that there's enthusiasm for re-registering with the Charity Commission.
Does section 84 of the CCBS Act 2014 not give you the power to relieve yourself of the audit requirement?
I have several FCA regulation clients who dont need an audit.
Only accounts prepared by a qualified accountant.
I have one that DOES need an audit and it cost them the thick end of £5k to tick what I have done for £1k. The only changes they have made in nearly 10 years have been utterly trivial and seem to be "we need to be seen to be doing something" changes.
It is not a challenge
Rules is rules
If your rules/constitution say audit then change the rules.
Page 5 on the guide
Unless you deal in others money you should be clear of audit.
If ever involved in this again Charitable company is always the correct choice.
Why? because any basic bookkeeper or unqualified accountant could put the accounts together. All accountants deal with company accounts every single working day
Get something deliberately different or clever or fashionable and you have volunteered for higher fees.
Even without an audit you still need a Qualified accountant because of the vehicle chosen.
Whoever set it up should have talked to an accountant before setting it up.
It is not a challenge
Rules is rules
If your rules/constitution say audit then change the rules.Page 5 on the guide
Unless you deal in others money you should be clear of audit.If ever involved in this again Charitable company is always the correct choice.
Why? because any basic bookkeeper or unqualified accountant could put the accounts together. All accountants deal with company accounts every single working day
Get something deliberately different or clever or fashionable and you have volunteered for higher fees.
Even without an audit you still need a Qualified accountant because of the vehicle chosen.
Whoever set it up should have talked to an accountant before setting it up.
Couldn't agree more.
Same here
Several are service charge companies.
A couple needed to change their old fashioned rules, as the audit was self inflicted.
There are not any that I am aware of.
But they are new and fashionable
I think the same about CIC
Charities and Charitable companies evertime.
There are not any that I am aware of.
But they are new and fashionable
I think the same about CIC
Charities and Charitable companies evertime.
Mmmm - CICs are slightly different. They don't always qualify as charities.
But - I'm not seeing a widespread need for them.
CIC are for traders who want to get grants
Classic CIC scenario for me is a few folk buying the village shop for the benefit of the whole village.
Don't knock it till you've tried it. :-)
Our village bought the last pub via a CBS. Worked well - there are quite a few advantages and, as ever, some downsides. Four advantages - easier to raise money, ability to pay tax deductible interest on shares, ability to withdraw shares, reporting requirements not too demanding and cheap now that the FCA have finally got their act together. One person, one vote stops large investors dominating; the fear that they might be put off by that restriction was not borne out in reality. A CIC might also have worked - can't remember now to what extent that was considered and I don't know much about them.
As ever, horses for courses but, in the right circumstance, a CBS is well worth thinking about.
Don't feel bad about replies
All accountants worth being called as such want the full picture, and quite often the question turns around.
https://makeanimpactcic.co.uk/2018/10/what-are-the-benefits-of-being-a-c...
See page 2
£90 for 30 minute call
CBS are useful in the right context.
Maybe your donor would prefer to buy shares instead. Some shares can be structured to be effectively donations whilst still being treated as equity but that would probably not be necessary and your standard shares will do. This is one of the classic cases where being one shareholder, one vote helps so that a donor does not gain a significant voting right.
If you have new rules (it sounds as if you do), you should be able to dispense with the audit but the resolution will need to be passed by the shareholders before the end of the year in question and every year thereafter. Does depend on size limits of course.
This is a useful resource; http://communityshares.org.uk/resources/handbook