It’s been a relatively quiet month regarding new consultations this month; however, read on to get up to speed with updated automatic disqualification rules and revised HMRC VAT guidance around contracts vs grants.
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Automatic disqualification rules
From 1 August 2018 changes to the automatic disqualification rules (for charities registered in England and Wales) mean that there will be more restrictions on who can run a charity. The Charity Commission for England and Wales published full guidance around what this means for charities on 17 January 2018, updating it on 1 February 2018.
In brief, charities have until 1 August 2018 at the latest to:
- Check whether any of their trustees or senior management might be disqualified under the new rules;
- Remove any such individuals from post or apply for a waiver – important to consider the implications where trustees are concerned and whether this would affect the quorate status of the board;
- Get all relevant individuals to complete a fit and proper form;
Review registers at Companies House (for incorporated charities under the Companies Act) and re insolvency.
Read the guidance in full here.
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HMRC update: Grants vs contracts
HMRC has issued updated guidance (VAT Supply and Consideration VATSC51600) to clarify the position around VAT applicability with regards to grants and contracts – a continual grey area for the sector.
The full updated guidance can be read here.
HMRC said: “The principal factor to consider is if a specific supply is made to the funder or a third party in return for a payment. If so then the payment is consideration for a supply, but if this direct link is not established then the payment can be treated as outside the scope of VAT.”
The Charity Tax Group is in the process of reviewing the guidance and is expected to comment in due course.
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OSCR online charitable registration – coming soon
OSCR are looking for beta testers for their online filing portal, which is currently under development. The Regulator is keen for you to get involved “whether you are someone who helps organisations apply for charitable status, have recent experience of applying for charitable status for your charity, are thinking of making an application or are just interested”.
If you are keen to get involved, email [email protected] and put ‘Online Application Testing’ in the subject line.
It is expected that this will go live in late 2018.
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Annual reporting – Northern Ireland
The requirement to file annual accounts is still relatively new for charities registered with the Charity Commission for Northern Ireland. Since the inception of new regulation in 2015, charities are required to file for accounting periods commencing on or after 1 January 2016 onwards.
The Commission reports that 1,300 of the 1,560 relevant charities met the 31 January 2018 filing deadline, while the 270 charities who failed to do so were automatically noted as being in default on their charity’s record.
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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:
Fundraising Regulator – three-part consultation on the Code of Fundraising Practice
The first two parts (A and B) invite feedback on specific issues raised by the sector in relation to complaints handling and the TPS Assured Certification. The deadline for response on these is 28 February 2018.
Part C proposes to introduce a new section to the Code for online fundraising platforms and aims to ensure that these platforms provide adequate and clear good practice guidance to individuals setting up a fundraising page on their sites.
It also aims to ensure relevant platforms follow the legal requirements set out within the recently introduced Payment Services Regulation 2017. The deadline for response on fundraising platforms is 14th March 2018.
Charity Tax Group (CTG) - Business rates in multi-occupied properties
The CTG reports that following an announcement in the 2017 Autumn Budget that the government would legislate to reinstate the relevant elements of the Valuation Office Agency’s (VOA’s) practice prior to the decision of the Supreme Court in Woolway, DCLG has launched a consultation on business rates in multi-occupied properties.
The ruling in the above case meant that two contiguous properties in the same occupation are only assessed as one if they can be considered as a self-contained piece of property. This applies if both parts are physically accessible without having to go onto other property or through commons parts (for example, a common corridor or stairwell). There has been an adverse effect on some ratepayers, including:
- increases to the overall rateable value due to the loss of “quantum discount”
- loss of Small Business Rate Relief for ratepayers who have seen their property split into parts
- changes to rateable value due to rounding
The ruling was potentially important for small charities and charitable companies because many of them occupy two or three rooms or floors in multi-occupied buildings and not all of them receive 100 per cent business rate relief.
The consultation was launched (on 2 January 2018) with the following scope:
- how the government should capture their policy revision intention in legislation, and
- how this policy intention should then be implemented
Responses should be sent in via e-mail by 23 February 2018.
The following consultations are closed with feedback analysis pending – watch this space for an update in future briefings:
- Charity Commission for England and Wales:
- 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 (CTG):
- Review of HMRC’s Guidance on Gift Aid Donor Benefits – closed 5 January 2018. To read more around the working group terms of reference and objectives click 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
- HM Treasury (HMT) – legislation to support cheque imaging. HMT consulted 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
Closed 1 December 2017. Draft legislation and supporting consultation documents can be viewed here.
- Charity Commission for Northern Ireland – Annual monitoring return 2018 – closed on 21 November 2017. Changes to apply to charities’ financial years starting on or after 1 January 2018. A full consultation report, providing an overview of the public consultation process and outlining how the Commission considered the responses they received will be available in Spring 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 incorporated and unincorporated business. Deadline for responses was 30 November 2017. For more information about the OTS’s call for evidence see here.
- OSCR - Fundraising draft guidance consultation – was extended to, and closed on, 8 December 2017. The response was split into parts:
OSCR will publish the final version of the guidance and an evaluation report of the consultation in early 2018.
- DCLG and DWP – Funding for supported housing - two consultations were launched on 31 October 2017 and closed on 23 January 2018 - one on housing costs for sheltered and extra care accommodation, and one on housing costs for short-term supported accommodation. For policy statement and consultation documents click here. Both consultations sought views on the design of the government’s new supported housing funding models which relate to England only.
About 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.