Charity Newsletter – June 2019

Trustee Charity Finance Competency Survey

For the second year in a row, MHA, our national association of UK accountancy firms, have partnered with the Charity Finance Group to carry out a survey, assessing the charity finance competencies of Trustees which is available here.

The results of the survey highlight that, like last year and consistent with the Charity Commission’s Taken on Trust study, there remains only ‘satisfactory’ standards when it comes to Trustees’ charity finance competencies. Broken down into five sections, the survey analyses the responses of over 200 charity professionals working in organisations with income ranging from under £1m to over £100m.

Tax updates

There have been several pieces of HMRC news and tax updates in the last month which could have a potential impact on charities. The key items are as follows:

  • Employer provided living accommodation: From the 6 April 2019, HMRC will no longer accept that the ‘customary’ exemption is appropriate to accommodation provided by employers within the Higher and Further Education Sector and therefore HMRC has now published guidance to this effect, precluding the tax exempt provision of this type of accommodation.
  • VAT on mixed sponsorship and donations: Section 5.9.6 has been added to VAT Notice 701/1 (How VAT affects charities) to give guidance on mixed sponsorship and donations. The revised guidance clarifies that VAT does not need to be accounted for on donations which are separate to sponsorship agreements, provided that any benefits the sponsor receives are not conditional on the donation being made. The new section also covers the VAT treatment of a charity letting a commercial business use its name to raise donations.
  • Making Tax Digital update: A new section in the Making Tax Digital VAT Notice 700/22 has been introduced on charity fundraising events, relaxing the digital links record keeping requirements.

The guidance now states:

Where supplies are made or received during  a charity fundraising event run by volunteers you may treat all supplies made as covered by one invoice for the event, and all supplies received as covered by one invoice for the event, for the purposes of the digital record keeping requirements.

This could significantly reduce the administrative burden of recording supplies received from a fundraising event.

  • Digital service for business rates: On 25 April 2019 the House of Commons introduced The Non-Domestic Rates (Preparation for Digital Services) Bill. The bill enables HMRC to expend its resources on beginning to design and build a new digital service for business rates. The implementation of any proposed reforms will require further legislation at a later date and the government plans to engage closely with local government and businesses in developing proposals.

Using Conflict as a Catalyst for Change

In conjunction with MHA, we have written together a monthly guide for embracing, managing and mitigating conflict within your charity. Each article covers a different type of conflict that may effect your charity with the overall theme of using conflict as a catalyst for change. The full guide is available here.

Institute of Fundraising publishes an updated GDPR guide

The Institute of Fundraising has published an updated guide for fundraising organisation which includes top tips and advice in relation to GDPR. For instance, it includes advice on assessing whether you have a legitimate interest and on employing a Data Protection Officer. A PDF version of the guide can be accessed here.

Cyber security breaches are on the rise

The Cyber
Security Breaches Survey 2019
, published in April by the Department
for Digital, Culture, Media and Sport, found that over one in five charities
(22%) reported a cyber security breach in the past 12 months, up from 19% in
the year before.

With the average cost of a breach
for charities being £9,470, this is particularly threatening to smaller
charities – especially because those charities with income under £100,000 were
reported as being less aware and equipped to deal with a breach than those with
income over £500,000.  

A topic we have been aware of and
advising our clients on for several years, we can help charities review their
exposure to, and explore insurance against, this issue of growing