Charity Newsletter – July 2019

Scottish charity law reform consultation responses published

The Scottish Government has published a summary of the responses received to it’s recent charity law consultation. Overall there was wide support for all the changes to Scottish charity law proposed by OSCR. The topics being consulted on were as follows;

  1. Publishing annual reports and accounts in full for all charities on the Scottish Charity Register.
  2. An internal database and external register of charity trustees.
  3. Criteria for automatic disqualification of charity trustees and individuals employed in senior management positions in charities.
  4. A power to issue positive directions to charities.
  5. Removal of charities from the Scottish Charity Register that are persistently failing to submit annual reports and accounts and may no longer exist.
  6. All charities in the Scottish Charity Register to have and retain a connection in Scotland.
  7. Inquiries into the former charity trustees of bodies which have ceased to exist and bodies which are no longer charities.
  8. De-registered charities’ assets and public benefit.
  9. The speed and efficiency of OSCR’s powers to gather information when making inquiries.
  10. The reorganisation of charities established under royal charter, warrant or enactment.

It has yet to be confirmed when a bill to implement these changes will be brought forward but OSCR have confirmed it will not be in the current session of parliament. The full analysis can be found here.

Charity Statement of Recommended Practice (SORP) governance review

The findings of the SORP governance review were published on the 6th of June. The purpose of the review was to analyse the Charities SORP development process as the SORP is now about to be applied in four jurisdictions of the UK and Ireland; with four different regulators.

A key recommendation is that the SORP making committee should be smaller and they should engage more with the key users of charity financial statements, such as the media, trustees and donors and what their requirements of financial statements are. The report also recommends that financial reporting for smaller charities should be simplified. The full report is available here.

Tax update

Charity Corporation Tax returns – HMRC have confirmed that the 3,000 charities in the UK with the largest gift aid claims will be asked to complete a tax return this year.  If your charity receives a request to complete a tax return and to iXBRL tag your financial statements this is something our tax team are experienced in performing for our charity clients and they will be able to help you with.

Proposed restriction to the employment allowance – HMRC have launched a consultation on restricting the £3,000 employment allowance to employers with employer NIC totalling less than £100,000 in the previous tax year. The purpose of the changes are to ensure the allowance targets small businesses.

Introduction of Employers NIC on certain termination payments – A bill has been introduced to parliament to align the NIC treatment of termination payments with the income tax treatment. From 6 April 2020 employer NIC at 13.8% will be payable on any part of a termination payment which is liable to income tax, i.e. the element above £30,000. Termination payments will remain exempt from employee NIC. HMRC guidance is available here.

Using Conflict as a Catalyst for Change

In conjunction with MHA, our national association of UK accountancy firms, we have produced a monthly guide for embracing, managing and mitigating conflict within your charity. Each article covers a different type of conflict that may affect your charity, with the overall theme of using conflict as a catalyst for change. The full guide is available here.

NCVO Charity Tax Commission report

The NCVO Charity Tax Commission has published the following suggestions for the improvement of charity tax reliefs;

  • Reforming Gift Aid to direct the additional value of relief above the UK basic rate to charities unless donors opt-out.
  • Developing a Universal Gift Aid Declaration Database (UGADD) to provide a single, enduring declaration which individuals can make covering all their subsequent gifts to charities.
  • Simplifying VAT for charities, for example, reviewing the rules around shared services could encourage cross-sector partnerships.
  • The provision of clear guidance by HMRC to public bodies so they can provide the VAT status of any charitable funding.  Grants and contracts are treated differently for VAT purposes but can be difficult to distinguish in practice.
  • Consulting on the extension of business rates relief to wholly-owned trading subsidiaries.

The full report is available here.

Cristina Pirolli

Cristina trained and qualified as a Chartered Accountant with Henderson Loggie and currently manages external audit and advisory services to clients in the not for profit sector, from small local charities to those operating nationally. She also manages a portfolio of commercial companies across a range of sectors.

Cristina is also a member of the firm’s Charity Sector Group.

Andy Niblock

Andy provides audit and accountancy services to clients in both the commercial and charitable sectors. He trained and worked for a Big 4 firm, and also worked in industry for a period before returning to the profession.

Andy has very much a hands-on approach due to his time spent in industry, and understands the practical issues of running a finance function and the issues they are faced with.

Andy also specialises in outsourcing of finance functions, providing this service to companies without their own in house finance team. The service Andy provides means he’s often involved with companies on a day to day basis, providing advice and ensuring their time is freed up rather than worrying about the financial administration side of their business.

Angela Whyte

Angela provides audit services to commercial clients, ranging from small to large corporates, across an assortment of sectors including publishing, retail and construction.

She also manages a portfolio of Further Education Colleges across Scotland, providing external audit services, as well as managing a range of accounting and management accounts assignments.

Angela trained and qualified with MHA Henderson Loggie.

Fiona Morgan

Fiona works with a variety of owner managed businesses and charities, both large and small, advising them on accounting, taxation and business improvement. Fiona is also responsible for the provision of the audit service within Aberdeen office.

Fiona’s clients operate in numerous sectors including food & drink, tourism, manufacturing, oil & gas service, professional services, retail, property development and recruitment. Working with them from inception through all the crucial phases in the development of a business, she has a personal approach which ensures that she can provide advice and re-assurance when it’s most needed.

Using her experience with Mindshop International, Fiona helps clients develop their businesses through business improvement services, specifically strategic planning, sustainable competitive advantage, family business issues, leadership development, personal development, and lean management..

George Hay

George is an experienced auditor and business adviser having worked in a wide variety of sectors and roles throughout his career. George’s focus is on the Agriculture & Rural Business and Charities sectors while continuing to act in a business advisory capacity for his long-standing commercial clients.

George likes nothing more than working tirelessly with his clients to assist them meeting their objectives and co-ordinating the firm’s specialist services to achieve this whether that be in the area of organic growth, acquisitions, disposals or effective tax planning.

George is also an accredited mediator.

Ian Cameron

Ian has over 20 years’ experience as a Partner in Henderson Loggie dealing with a varied portfolio of clients, both large and small, helping them with all their financial requirements. He provides general business advice and accounts preparation, as well as both personal and corporate tax.

Ian acted as local secretary for ACCA and was also as part of the Scottish Executive Committee for ACCA where he acted as the National Technical Liaison Officer.

Ian is Head of the firm’s Motor Retail Sector Group.

Jamie Davidson

Jamie is an experienced auditor with strong technical skills who provides audit and accounting services to our clients across a wide range of sectors. He trained with a Big 4 firm and after qualifying in 1987 he gained twenty years of experience before joining Henderson Loggie in 2007.

Jamie has wide commercial experience having worked with clients in many sectors and of all sizes from owner managed businesses to large groups. As well as core audit, Jamie has been involved in large projects for clients involving acquisitions and systems implementation. He brings all of that experience to bear on his client relationships where he seeks to add value in a proactive manner.

Jamie specialises in the audit of charities and works with many high profile Scottish charities. He is head of our charities sector group and sits on the ICAS Charities Committee.

Steve Cartwright

With extensive experience of working with owner managed businesses, Steve’s main priority is working with clients to assist them in achieving their full potential in terms of growth and profitability, and maximising the value of their business. This includes strategic and business planning and business improvement, as well as risk and lean management, helping clients reduce costs and inefficiencies.

Steve leads the firm’s Creative & Interactive Media Sector Group. Steve has been working with independent video games developers in Scotland since the late 1980s and is supported by a team with significant knowledge of the sector.

Steve also leads Henderson Loggie’s Business Leaders Group. A group for Chief Executives and Managing Directors of owner managed businesses in Scotland. The group meets on a quarterly basis, giving members access to a wealth of business and continuous improvement tools and processes and networking opportunities both locally and globally, via our partnership with Mindshop International (a strategic leadership training organisation which operates globally).

As well as being a member of the Institute of Chartered Accountants of Scotland, Steve is currently the Vice Chairman of the Tayside branch of the Institute of Directors and is a one of the longest serving UK members of Mindshop International.

Stuart Inglis

Stuart has considerable experience in managing assurance audit work across the Firm’s portfolio of public sector clients including further and higher education, local government, housing association, research organisations and Non-Departmental Public Bodies (NDPBs). He has played a lead role in developing the Firm’s risk-based approach to internal audit to ensure full compliance with the Public Sector Internal Audit Standards.

In particular, Stuart has been involved in both internal and external audit assignments within the further education sector since the incorporation of colleges in 1993 and currently manages the Firm’s audit and other services to a significant number of colleges throughout Scotland.

Stuart has a detailed understanding of the corporate governance, performance management and financial issues relevant to the sectors in which he works. He uses his knowledge and experience to identify appropriate best practice benchmarks, an approach that is well received by clients who recognise the ‘added value’ that he provides.