Charities and Not for Profit

In the face of increasing legislative and regulatory pressure on the not for profit sector, the need for efficient management of your finances underpinned by a strong and effective governance structure has never been more important.

Balancing this pressure with funding concerns, presents challenges for the charity and not for profit sector.

We understand the challenges of the sector; our in-house charities team comprises tax consultants, VAT advisers, corporate finance experts and a skilled compliance team.

We provide advice to interpret legislation, reduce the tax burden and navigate through the VAT complexity – whether you are a charity, a place of worship, social enterprise, membership or trade organisation.

Our advice includes:

  • Advice on charity structures
  • Management Accounts
  • Tax Compliance and Planning
  • Audit and independent examination
  • Payroll and Bookkeeping
  • Risk Management, Compliance and Governance
  • Mergers and collaborations, including due diligence
  • Compliance health checks on Gift Aid, VAT and tax
  • Trading activities, using subsidies, social enterprises and Community Interest Companies (CICs).

Find out more:

The decision to set up of a new charity is a significant one and the responsibilities involved in running it will be far-reaching.

So very careful consideration and planning are essential before the first step is taken, particularly in view of comments from the Charity Commission that “too many people set up a new charity without making sure they have identified an unaddressed need…without making an honest effort to establish whether another charity is already doing similar work. The result is duplication…and too many charities that are not managed well enough.”

At Haslers, working alongside other professional advisers, such as solicitors, we will use our charity and not for profit experience to examine your plans and advise on whether setting up a charity is the best way forward or whether there are other options for achieving your goals.

If you do decide that you want to establish a new charity, you will need to decide on the best structure for your organisation. There are four main types of structure:

  • Charitable Incorporated Organisation (CIO), either an association CIO or foundation CIO
  • Charitable company, limited by guarantee.
  • Unincorporated association
  • Trust.

If a charity has an incorporated structure (CIO or charitable company), it is considered in law to be a “person” in its own right. This means that it can:

  • Employ paid staff
  • Deliver charitable services under contractual agreements
  • Enter into commercial contracts in its own name
  • Own freehold or leasehold land or other property.

If a charity structure is a corporate body, generally its trustees enjoy greater protection than if the organisation is unincorporated. However this structure does involve greater financial compliance considerations.

If charity is not a corporate body (unincorporated association or trust):

  • The trustees are personally liable for what it does
  • The charity will not be able to enter into contracts or control some investments in its own name
  • Two or more trustees, a corporate custodian trustee or the charities’ land holding service will have to “hold” any land on the charity’s behalf.

Alongside these issues, there will be a range of other factors unique to each charity that will financial, operational and strategic point of view.

Haslers’ charity team can provide expert advice to assist charity leaders and trustees in making informed decisions about the most appropriate structure for their new organisation, as well as advising existing charities that may be considering a change of structure as their organisation evolves.

To find out more about Haslers’ East London and Essex-based accountancy, tax and business advisory services for charities, please contact us.

The rules around charity reporting are complex, with different requirements for different sizes and types of charities, i.e. whether the charity is unincorporated, incorporated (a charity company) or a charitable incorporated organisation (CIO).

The precise accounting and reporting requirements for each charity will depend on its individual circumstances, which is why expert advice from charity specialists, like the team at Haslers is essential to identify the right approach. Key aspects to consider for your charity are:

  • The contents of your governing document
  • Your charity’s income levels
  • Your charity’s gross assets.

We review all our clients’ legal requirements on a regular basis to ensure that they are financially compliant.

Whether you need an independent examination or an audit, Haslers offers much more than a simple “tick box” examination of your charity’s records, to confirm your organisation’s financial integrity.

We also use your audit to identify risks and problems that could arise in the future and advise you on ways to strengthen systems and controls to address these, as well as highlighting opportunities to maximise tax efficiency and make the best use of available budgets.

We will also use our experience in the charities and not for profit sector to ensure that your accounts and reports meet regulatory requirements and present them in a way that goes beyond the numbers, to make the most of a valuable opportunity to highlight your achievements and effective organisational management.

With the Charity Commission highlighting the importance of charities filing on time – and even encouraging donors not to support those that send in accounts late – Haslers’ charities team can provide timely support to ensure the commission’s deadlines are met.

To find out more about Haslers’ East London and Essex-based accountancy, tax and business advisory services for charities, please contact us.

Charities are not commercial, profit-focused organisations but one key area where they do need to act like successful businesses is by making forward planning a priority.

Strategic planning enables charity trustees to assess where their charity is now, where they want it to be in the future and to establish the actions and resources necessary to help them get there.

At Haslers, we understand that it can be difficult for those involved to take time to step back from day-to-day issues and look at the bigger picture.

We can take an objective view of the organisation and provide expert, independent advice to help charity leaders make informed decisions about short and longer-term goals for their organisation and to draw up and implement action plans for achieving them.

Many small charities struggle to find trustees and meet rising overheads from an income of perhaps just a few thousand pounds. Against a backdrop of public sector costs, it can make sense for two or three smaller organisations with compatible aims to join forces, making it easier to fill trustee posts and streamline costs.

If your charity is considering a merger, we can carry out financial due diligence to assess the suitability of potential candidates, so that you can enter your new partnership confident that there will be no unpleasant surprises at a later date.

We can also use our expertise in this area to ensure the new merged charity begins life on the strongest possible financial position and with the most appropriate structure.

To find out more about Haslers’ East London and Essex-based accountancy, tax and business advisory services for charities, please contact us.

The rules around charity reporting are complex, with different requirements for different sizes and types of charities, i.e. whether the charity is unincorporated, incorporated (a charity company) or a charitable incorporated organisation (CIO).

The precise accounting and reporting requirements for each charity will depend on its individual circumstances, which is why expert advice from charity specialists, like the team at Haslers is essential to identify right approach. Key aspects to consider for your charity are:

  • The contents of your governing document
  • Your charity’s income levels
  • Your charity’s gross assets.

We review all our clients’ legal requirements on a regular basis to ensure that they are financially compliant.

Whether you need an independent examination or an audit, Haslers offers much more than a simple “tick box” examination of your charity’s records, to confirm your organisation’s financial integrity.

We also use your audit to identify risks and problems that could arise in the future and advise you on ways to strengthen systems and controls to address these, as well as highlighting opportunities to maximise tax efficiency and make the best use of available budgets.

We will also use our experience in the charities and not for profit sector to ensure that your accounts and reports meet regulatory requirements and present them in a way that goes beyond the numbers, to make the most of a valuable opportunity to highlight your achievements and effective organisational management.

With the Charity Commission highlighting the importance of charities filing on time – and even encouraging donors not to support those that send in accounts late – Haslers’ charities team can provide timely support to ensure the commission’s deadlines are met.

To find out more about Haslers’ East London and Essex-based accountancy, tax and business advisory services for charities, please contact us.

A major change for the charities sector will take effect next year when the Charities Statement of Recommended Practice (SORP) 2005 is replaced with two new SORPs for charity accounting and reporting.

The existing Charities SORP 2005 will be replaced for accounting periods beginning on or after 1 January 2015, with two new versions: the FRSSE (Financial Reporting Standard for Smaller Entities) SORP and the FRS 102 SORP.

The FRSSE SORP can only be used by small entities as defined by the Companies Act 2006, which means they must meet two of the following three criteria:

  • Income of less than £6.5 million
  • Assets of less than £3.26 million
  • Fewer than 50 employees.

Charities using the FRSSE SORP should be aware that the FRSSE is due to be replaced, probably in 2016, with an updated version that reflects changes made to the UK GAAP (Generally Accepted Accounting Practice) in 2013. As a result the FRSSE SORP will also need to change so charities using this version could face changes in accounting policies and disclosures both next year and in 2016.

The FRS 102 SORP, which is named after the accounting standard recently introduced to bring the UK more into line with international accounting standards, is mandatory for any charity breaching the thresholds above and can be voluntarily used by a charity if under these thresholds.

The FRSSE SORP will require less disclosure that the FRS 102 SORP. However, there are parallels between the two, which will run alongside each other and both have been divided into modules, to make them easier to read.

Key messages within both SORPs include an emphasis on transparency and impact reporting. Some other key similarities and differences include:

  • The requirements of the trustees’ annual report are the same for both SORPs (including requiring larger charities to provide more information on issues including social investment policies, the financial effect of significant events, a description of principal risks facing the charity and strategies for managing these and pay and remuneration arrangements for key management personnel)
  • Both SORPs require charities to explain any policy they have for holding reserves, the amount of reserves and why they are held (or explain why trustees have decided it is unnecessary to hold reserves)
  • All trustees who acted during the year, or are in position at the time the trustees’ annual report is signed, must be listed
  • The requirements in both SORPs are the same for fund accounting and the
  • The format for the balance sheet is common to both SORPs but there are some differences in terminology and in detailed accounting treatments
  • Gains and losses on investment assets count towards net income/expenditure in the FRS 102 SORP but are excluded from these categories in the FRSSE SORP
  • The cash flow statement is optional under the FRSSE SORP but mandatory for FRS 102 SORP, in which it has three elements – cash flows from operating activities, investing activities and financing activities
  • Within module 3 (accounting standards, policies, concepts and principals) the terminology and definitions used differ significantly between the two SOPRS. More disclosure is required in FRS 102 SORP
  • FRS 102 SORP changes one of three criteria for income recognition, requiring that income should be recognised when its receipt is “probable” (rather than “virtually certain” in the SORP 2005)
  • In regard to trustee and staff remuneration, FRS 102 SORP requires that, among other items, charities must disclose the total paid to key management personnel; contributions paid to a pension fund for the benefit of employees; details of redundancy and termination payments.

Both SORPs are complex documents and it is advised that charities seek expert advice on their contents and implications for them individually, well in advance of when they take effect from January 2015.

To find out more about Haslers’ East London and Essex-based accountancy, tax and business advisory services for charities, please contact us.

VAT can be a significant cost to a charity or not for profit organisation. The complexity of the VAT regime also creates the potential for costly pitfalls and errors.

If total taxable income from business activities exceeds the VAT registration threshold – £85,000 (currently) – the charity must register for and charge VAT. Charities below that threshold may choose to register voluntarily, in order to reclaim the VAT on certain expenditure that would otherwise be irrecoverable.

As well as registration issues and the VAT exemptions and reliefs to which they may be eligible, charities also need to get to grips with other aspects of VAT, including the sale of donated and bought in goods and fundraising events.

At Haslers, we offer specialist expertise in VAT and can provide advice on VAT registration, both mandatory and voluntary, VAT compliance and VAT recovery, to maximise VAT efficiency and improve your day-to-day VAT administration.

We also provide advice to maximise the VAT efficiency of a one-off transaction or of a project involving capital expenditure.

Contracts are liable to VAT and grant income is not, but grey areas can occur between the two. We provide advice to ensure that the wording of such arrangements make clear their status and do not create unnecessary VAT liabilities through ambiguous language.

To help charities and not for profit organisations improve their overall financial health, we also carry out comprehensive VAT audits to identify where changes can be made to help save money, correct weaknesses and reduce risks, while always maintaining compliance with the VAT regime.

To find out more about Haslers’ East London and Essex-based accountancy, tax and business advisory services for charities, please contact us.

Charity trustees are the lifeblood of their organisations. Whether they are known as trustees, directors, board members, governors or committee members, they voluntarily give their time and expertise while taking on significant responsibilities.

As well as ensuring that the charity delivers its objectives, trustees are also responsible for:

  • Preparing trustees annual reports and submitting annual return forms and accounts
  • Ensuring the charity complies with the rules set out in its governing document
  • Ensuring charitable funds and assets are used wisely to further its charitable aims
  • Not putting the charity’s property, funds, assets or reputation at risk
  • Taking appropriate care and advice when investing or borrowing money.

At Haslers, we understand that while the work of a trustee can be richly rewarding, it requires real commitment and dedication. In a voluntary role – and in the face of regular changes to relevant legislation and regulation – the work and responsibilities involved can be complex and challenging.

The better informed and more knowledgeable trustees are, the more their charities will benefit, so we offer practical support to charity trustees to help them understand their obligations and ensure their organisation is run properly and efficiently.

Our charities team is experienced in offering advice to trustees on a wide range of matters, including compliance and potential risks to the organisation’s finances, and can tailor training to specific needs.

To find out more about Haslers’ East London and Essex-based accountancy, tax and business advisory services for charities, please contact us.

Laura-Ambrose

Laura Ambrose

Business Services Group and Operations Partner