Charities Bulletin by bes18335


									Charities Bulletin
Spring 2009
     Need Money?                               FRAUD - It Really                              Exceptional!
   Make an Application                            Happens
There are very many grant making          There is an independent school             Certain charities are excepted or
charities at local, national and inter-   in Hertfordshire where the pupils          exempt from registration with the
national level. The smaller ones in       regularly stage concerts and plays,        Charity Commission. Excepted
particular sometimes struggle to find     donating ticket proceeds to a lo-          charities have always nonetheless
appropriate organisations to receive      cal charity. But the parents of one        been subject to Charity Law and to
grants which may be up to several         pupil have more than once also sold        the Commission – they simply did
thousand pounds in value.                 a second set of tickets – demand is        not have to register or to file annual
                                          high – in order to pocket the cash.        accounts and returns. Exempt
Make your charity aware – use the                                                    charities may not register: although
Directory of Social Change and net-       This is unsophisticated and did not        subject to Charity Law they are ruled
working to identify possible donors.      involve a great deal of cash but it        directly by the Courts – and generally
                                          does illustrate the fact that fraud        by some other regulatory body.
Then make your applications appro-        is not only possible but actually
priate. Don’t just find a name and        happening in the most unlikely
address and fire off a letter. Even       settings.
those charities with very general
powers to give to “any charitable             Vetting & Barring
purpose” may have a restriction on
which sector of the Public may ben-       From October 2009 this new scheme
efit – by geographical area, age, or      requiring registration of those            The Exception is now being removed.
by numbers.                               wishing to work with children or           During 2009 Excepted Charities
                                          vulnerable adults with the Independ-       with income of over £100,000 will
                                          ent Safeguarding Authority (ISA) will      be registering with the Commission
                                          begin to take effect. The Safeguard-       and in future will need to file Annual
                                          ing Vulnerable Groups Act 2006 (The        Report and Accounts and Information
                                          Act) introduces the Scheme which is        Returns. As noted, the duties of
                                          in addition to the Criminal Records        Trustees will not in fact change, but
                                          Bureau (CRB) checks.                       those affected are generally taking
                                                                                     a look at their constitutions and
Simply look at the Charity                It will be a criminal offence for an       procedures.
Commission website to find the full       employer not to check a person’s
Objects and follow any links for fur-     ISA status before allowing them to         Wright Vigar’s Seminars are forming
ther clues. The Trustees may have a       take part in a “regulated activity”. The   the basis for assistance to some of
policy to guide you. The Annual Re-       rules take effect for new employees        those Trustees who feel the need to
port and accounts could be useful. If     on 12 October 2009 and for existing        catch up!
they are not available from the Com-      employees in 2010.
mission that is a clue that the Grant-                                               The biggest groups of charities
maker is a small charity (income less     The Act also requires employ-              affected are “establishment” churches
than £20,000).                            ers to refer relevant information          and Armed Forces charities. Scout
                                          (concerning registered persons)            groups and similar organisations are
Enclosed with this Bulletin are details   to ISA. Conversely, ISA will inform        also excepted charities but are not
of some such charities. Contact us if     employers of any change in status of       generally large enough to be caught
you know of others which would wel-       their registered employees.                this year.
come the chance next time around!

                                          Gainsborough Lincoln London                           Retford Sleaford
          Trading Companies, Tax and Capital Expenditure
If a Charity carries on trading for fund-   property so that substantial expendi-      investments and the Trustees must
raising purposes and the total annual       ture looks risky with no guaranteed        ensure they safeguard Charity’s
income from that source exceeds:            return.                                    assets. This will also focus attention
                                                                                       on the actual trading performance of
- £5,000 or                                 The following steps        should be       Sub; it needs to make a real return
- 25% of total income if greater but        considered – with          appropriate     on investment.
  at most                                   advice:
- £50,000                                                                              If Charity owns the trading premises
                                            Review Sub’s constitution                  or has the Head Lease, are there
then the profits from that trading will     It was common practice for Sub to be       proper lease agreements with Sub
be taxable. There may also be VAT           obliged to transfer all profits to Char-   and is market rent charged?
complications.                              ity, but this can cause problems and
                                            conflicts of interest.                     . . . and think about this:
Thus a Charity with more than mini-
mal fundraising trade may decide            Make full use of Sub’s tax allow-          Charity owns the property or has
to use a subsidiary company (Sub).          ances                                      the Head Lease and Opts to Tax it.
Sub may well be VAT registered, but         The new Annual Investment Allow-           (Charity must first register for VAT ).
the position will be no worse than if       ance will give full deduction from         In future it will charge VAT on the rent
there was a VAT registration within         profits for expenditure up to £50,000      paid by Sub at a level set to cover
Charity itself. Meanwhile profits can       on equipment.                              refurbishments in the long run. Char-
be transferred to Charity under Gift                                                   ity can then improve its asset and re-
Aid, which means that no corpora-                                                      claim input VAT on the expenditure.
tion tax will be payable, a distinct im-
provement!                                                                             To discuss these ideas further
                                                                                       contact Bridget Starling
So suppose Charity has done this.
Sub runs shops (remember sale of                                                       FORTHCOMING SEMINARS
donated items is zero-rated for VAT,                                                       & WORKSHOPS
but bought in goods such as station-
ery and souvenirs will attract full rate    Review Charity’s constitution                £11.50 (incl VAT) per person
VAT), cafes, flower deliveries etc.         Ensure that the support given to Sub
                                            is within its powers.                          Annual Report and
But Sub needs to refurbish premises                                                     Accounts: Activities - Income,
and purchase equipment. It cannot           Formalise relations between Char-            Expenditure, Public Benefit.
do this because it has no money –           ity and Sub                                    Tuesday 28 April 2009
profits are all given away to Charity.      Charity and Sub are separate legal                  4pm to 6pm
If it keeps some back, it will have to      entities. The directors of any limited      at Wright Vigar, 15 Newland,
pay corporation tax. In fact its consti-    company must act in the best inter-                   Lincoln
tution may prevent it from doing this       ests of the company. Remember the
anyway.                                     interests of the company will be de-           Update on Recent
                                            termined by its Memorandum and             Legislation: How the Charities
Perhaps Charity could incur the ex-         Articles of Association, so will include     Act 2006 and Companies Act
penditure out of the profits which          donations to Charity!                            2006 Affects Charities
have been transferred. After all, it is                                                     Tuesday 23 June 2009
all in the interests of raising further     There should be some Directors of                    4pm to 6pm
funds. But maybe Charity is not VAT         Sub who are not Trustees of charity         at Andrew & Co, St Swithin’s
registered: save on Corporation Tax         and vice versa.                            Court, 1 Flavian Road, Lincoln
but suffer on VAT!
                                            If Charity has made loans to Sub,
Or maybe it has no interest in the          were they properly set up and is
                                            interest charged? Such loans are
                                            Gainsborough Lincoln London                            Retford Sleaford

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