Charity compliance update November 2017

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Jen Gerrard from Gerrard Financial Consulting rounds up the news and consultations from the world of charity compliance during the month of November. 

Can you believe it’s Trustees Week again? This year’s celebrations take place between 13 and 17 November. Keep an eye on the Trustees’ Week web page here for more info about what’s on nationally.

It has also been a busy few weeks on the consultation front, with a few new key consultations being launched – stay up to speed by browsing our update section towards the end of this update.

Information Commissioner’s Office – GDPR support

OSCR reports that the Information Commissioner’s Office (ICO) launched a dedicated advice line on Wednesday 1 November to help small organisations prepare for a new data protection law.

The phone service is aimed at people running small businesses or charities and recognises the problems they face getting ready for the new law, called the General Data Protection Regulation (GDPR), which comes in to force on 25 May 2018.

People from small organisations should dial the ICO helpline on 0303 123 1113 and select option 4 to be diverted to staff who can offer support. As well as advice on preparing for the GDPR, callers can also ask questions about current data protection rules and other legislation regulated by the ICO including electronic marketing and Freedom of Information.

Office of Tax Simplification (OTS) VAT review

On 7 November 2017 the OTS published its first report on VAT with 23 recommendations for simplifying VAT. The eight core recommendations are:

  1. The government should examine the current approach to the level and design of the VAT registration threshold, with a view to setting out a future direction of travel for the threshold, including consideration of the potential benefits of a smoothing mechanism
  2. HMRC should maintain a programme for further improving the clarity of its guidance and its responsiveness to requests for rulings in areas of uncertainty
  3. HMRC should consider ways of reducing the uncertainty and administrative costs for business relating to potential penalties when inaccuracies are voluntarily disclosed
  4. HM Treasury and HMRC should undertake a comprehensive review of the reduced rate, zero-rate and exemption schedules, working with the support of the OTS
  5. The government should consider increasing the partial exemption de minimis limits in line with inflation, and explore alternative ways of removing the need for businesses incurring insignificant amounts of input tax to carry out partial exemption calculation
  6. HMRC should consider further ways to simplify partial exemption calculations and to improve the process of making and agreeing special method applications
  7. The government should consider whether capital goods scheme categories other than for land and property are needed, and review the land and property threshold
  8. HMRC should review the current requirements for record keeping and the audit trail for options to tax, and the extent to which this might be handled online.

The report indicates which recommendations could be progressed in the short term (1 year), medium term (2 to 5 years) or long term (5+ years). Where appropriate, those recommendations which could not be implemented under present EU law are identified.

The Charity Tax Group are currently reviewing the full report but welcome the implications around Partial Exemption simplifications.

OSCR file submission guidance

The Office of the Scottish Charity Regulator (OSCR) has this month published a gentle reminder around best practice file submission, with some helpful hints for successful uploading:

“When you are uploading a file using OSCR Online, it cannot be larger than 8mb in total.”

“…. you should scan the signed document, so it becomes a PDF file, then send it to us.”

“You can avoid having documents that are too large by scanning them with a lower ‘dots per inch’ (dpi) setting. A document should still be legible if it is scanned between 300-600 dpi. When you are scanning at a lower dpi, remember to check the document on your computer screen to make sure that the text can be read easily. Also, you should scan it in as a greyscale document, as this will reduce file size.”

IFA added to list of OSCR approved examiners

OSCR announced on 7 November that the Charities and Trustee Investment (Scotland) Act 2005 (the 2005 Act), and the Charities Accounts (Scotland) Regulations 2006 (the Regulations) have been amended to allow members of The Institute of Financial Accountants (IFA) to also provide independent examination services to charities preparing fully accrued accounts.

Consultations round-up

Here’s our monthly round-up of (and links to) key consultation opportunities and those closed, pending feedback.

The following consultations are currently open and inviting a response:

  • Charity Tax Group: Potential new Welsh taxes - opened 5 July 2017. The Welsh Government finance secretary will suggest that taxation could be used to change behaviours or to discourage activity which has negative social impacts. Email [email protected] to get involved. A shortlist of ideas will be considered in late 2017
  • DCLG and DWP: Funding for supported housing - two consultations were launched on 31 October 2017; one on housing costs for sheltered and extra care accommodation, and one on housing costs for short-term supported accommodation. For policy statement, consultation documents and how to respond click here. Closes 23 January 2018. Both consultations seek the views on the design of the government’s new supported housing funding models which relate to England only.
  • HM Treasury (HMT):  Legislation to support cheque imaging – opened 3 November 2017. HMT is consulting on two measures to support the introduction of the Image Clearing System (ICS) for cheques:
    • Use of cheques as evidence of payment
    • Compensation in the event of an ICS loss

Closes 1 December 2017. Draft legislation and supporting consultation documents can be viewed here.

  • Charity Commission for Northern Ireland: Annual monitoring return 2018 – opened 12 September 2017, will close 5pm on Monday 20 November 2017. Changes to apply to charities’ financial years starting on or after 1 January 2018.
  • Charity Commission for England and Wales: Annual return 2018 – opened 1 September 2017, will close 5pm on 24 November 2017. Changes to apply to charities’ financial years starting on or after 1 January 2018.
  • Office of Tax Simplification (OTS): Review of depreciation and capital allowances and whether the use of accounts depreciation to provide relief for capital expenditure instead of capital allowances would simplify the preparation of tax returns for the incorporated and unincorporated business. The OTS is planning to have arranged stakeholder meetings or to have received written responses via e-mail, by 30 November 2017. For more information about the OTS’s call for evidence see here.
  • OSCR: Fundraising draft guidance consultation – opened 7 September 2017, will close 1 December 2017. The response is split into parts:

The following consultations are closed with feedback analysis pending – watch this space for an update in future briefings:

  • Charity Commission for England and Wales:

o    The use and promotion of complementary and alternative medicine (CAM): making decisions about charitable status – closed on 19 May 2017. This consultation is about the commission’s approach to deciding whether an organisation which uses or promotes CAM therapies is a charity. The commission has released a statement, following receipt of over 600 responses:

“The Commission had planned to publish an analysis of the consultation in early August. However, the high volume of submissions means it has not been possible to prepare the analysis in that timeframe. We will continue our work on the review and plan to publish our analysis later in 2017.”

  • Charity Tax Group – taxation of employee expenses – closed 10 July 2017 – you can review the key consultation objectives and questions here.
  • HMRC – withdrawal of statutory concessions – closed on 7 March 2017

HMRC - Draft legislation: the Value Added Tax (Refund of Tax to Museums and Galleries) (Amendment) Order 2017 – published 27 March 2017, closed on 21 April 2017

About Jen Gerrard

Jen Gerrard

Jen is a Fellow of the Association of Chartered Certified Accountants (FCCA) and the founder and managing director of Gerrard Financial Consulting, a specialist accounting firm for the charitable sector. She has over 17 years’ experience working in accounting and finance and has also worked as an accountancy tutor for a leading training provider.

Jen has been a trustee of the Southville Community Development Association (2014 to 2017), Self Injury Self Help (SISH) (2013-2016), the Oswestry Food & Drink Festival and Impact AAS (2007 to 2010). In addition to being a current Trustee of Women’s Aid Federation of England, Jen has been a registered volunteer with Volunteer Bristol for four years and is a Member of the ICAEW Charity & Voluntary Sector Specialist Group.

Jen sits on the South West & Wales Regional Engagement Forum of the Charity Finance Group and makes regular contributions to articles in national publications – most recently AccountingWEB and Charity Finance Focus (produced by the CFG). She is also a regular speaker on charity finance and governance matters.

Her firm is a corporate member of the Charity Finance Group and was shortlisted in two categories for the AccountingWEB Practice Excellence Awards 2016. This is in recognition of the company’s innovative work with charities and NFPs to streamline their finance functions through adoption of new technology.

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