Following the various charity sector scandals on recent years we need to make 2019 the year that the sector rebuilds public trust. At SV, we are committing to play our part in working with our clients to achieve this. We believe that transparent and meaningful financial information is one way to do that. By ‘meaningful’ financial information we mean much more than SORP compliant accounts. Charities need to be thinking of their audience and tailoring their information to tell the story of how they turn the financial resources available to them into social impact. We will be supporting our audit clients to find ways of telling this story. We have written and spoken a lot about fraud in the charity sector over the last couple of years. Nothing destroys trust in the charity sector more than the thought that donated funds end up being lost to fraud. We will be continuing to advocate for greater fraud awareness and effective controls in charities. Finally, smart risk management processes will help build more resilient charities better placed to absorb and adapt to external shocks. We will continue to work with our clients to improve the understanding of risk and to develop more risk intelligent organisational cultures. What else will be doing in 2019? We are delighted to start the new year welcoming Fleur Holden as a SV partner. As many will know Fleur has been hugely successful in building our presence in the Midlands and will continue to do that in her new role. Our newsletters in 2019 will continue to bring you regular updates in tax, accounting, governance and risk matters. It is entirely possible (?) that we will have a clearer idea as the year progresses on how the charity sector will be impacted by Brexit and this will surely feature in 2019 newsletters too. We are looking forward to partnering with Russell Cooke for a Brexit discussion evening in February. We will soon be announcing dates and locations for 2019’s Charity Accountants Conference. We look forward to seeing many of you there and at our various training days and seminars throughout the year.
Fleur Holden has been promoted to Partner as we look forward with ambitious growth plans in 2019. Fleur is the firm’s sixth Partner and is based in the Midlands region. She has been instrumental in growing the Midlands business since September 2014 when she joined as a Director. Fleur will focus on growing the portfolio of charity clients in the Midlands. She will also work closely with the other Partners overseeing the strategic direction of the business. During her time at Sayer Vincent, Fleur has grown the client base and expanded her team in the Midlands. She works with a range of small and large charity clients, with the largest having an income of £70 million. Fleur also runs several of Sayer Vincent’s training seminars, including Trustee and Board training. As a USAID specialist, Fleur will also be helping charities meet the new reporting requirements, following significant changes in the rules and regulations set by the US Government in 2017. Commenting on her promotion Fleur says:
Jonathan Orchard, Partner at Sayer Vincent says:
“I’m really excited to have been made Partner and I’m looking forward to the challenge of expanding our client base throughout the Midlands. Working at Sayer Vincent reflects my own values and ethos and partners and staff work together and support each other to ensure the best outcome for clients.
“We work collaboratively and flexibly with clients and offer a bespoke audit approach to fit their needs. Auditing is a people-orientated activity and we always work on that basis. I’m proud to be continuing my career with Sayer Vincent.”
“We’re delighted to promote Fleur to Partner. Since joining the team four years ago she has shown commitment, drive and dedication and shares our goals of delivering excellent services and treating clients and staff well. Through her hard work we’re building a great reputation with social purpose organisations in the Midlands. We look forward to helping many more organisations achieve the best financial outcomes and in turn deliver more for their beneficiaries in 2019.”Fleur is a qualified chartered accountant and Fellow of the Institute of Chartered Accountants in England and Wales, with a practising certificate and authorised to act as a statutory auditor.
The government has announced that off-payroll working rules, known as IR35, currently only in the public sector will be rolled out to the private sector as well. This means that the responsibility for determining whether or not a person working for your organisation should be on the payroll, rather than freelance or contracted will fall to the organisation and not the individual even if the person is hired via a personal service company. HMRC provide an online tool to help determine if any specific person or role would be considered to be employment. The Check Employment Status for Tax service (CEST) is available here. If you find that you should have treated persons as employed, they may then be entitled to employment benefits and both your organisation and the individual might need to pay employment taxes (income tax and NICs). As such it is important that once these rules come into effect, you are satisfied of the status of any people hired via personal service companies working for your organisation. It is already important to check this for any individuals you hire as consultants rather than as employees. The change to include personal service companies is due to come into force from April 2020 but helpfully this will only apply if your organisation is deemed ‘non-small’. ‘Non-small’ organisations are those with two of the following: • Income over £10.2m • Gross assets over £5.1m (fixed assets plus current assets) • Over 50 employees Further guidance is expected from HMRC in due course.
One of the few VAT reliefs available to charities is on advertising. Charities are able to ask their advertising suppliers to invoice them with VAT at the zero-rate rather than the standard rate. However, targeted advertising (e.g. direct mail) does not fall within HMRC’s definition of advertising. HMRC has also recently decided that adverts placed on social media platforms (e.g. Facebook and Instagram) do not qualify for the relief as they are targeted based on the individual’s browsing history. Charity Tax Group has spoken to HMRC about this, arguing that HMRC is not interpreting the legislation as it was intended. HMRC has so far refused to budge on their position. HMRC set their position out as follows: We have identified four scenarios where advertising takes place online. We consider the VAT treatment to be as follows. • ‘Natural hits’ – not supplies of advertising for the purposes of item 8 – standard rated • Pay-per-click adverts – zero rated • Direct placements on third party websites – zero rated • Social media adverts – standard rated HMRC say they cannot give any detail on what falls into each category. Being unable to claim the VAT relief on social media advertising will result in a significant increase in irrecoverable VAT for charities, and Charity Tax Group is continuing to campaign on this issue.
Jess joined Sayer Vincent as a trainee in 2012 and qualified in 2015. Since then, she has dedicated her career to the social purpose sector, working her way up to audit manager at SV before moving on to Help Musicians where she was the Finance Manager. Jess has recently started a new position as Head of Finance at Painshill Park Trust in Surrey. We caught up with Jess and she has reflected on how her training at SV equipped her with the depth of knowledge she has taken forward to her role since leaving.
How was your time training and working at Sayer Vincent?Working at Sayer Vincent was the perfect start to my accounting career. As an audit trainee, I was able to visit a different charity every week and get to know so many wonderful organisations doing fantastic work for their beneficiaries. The breadth of knowledge gained from working across so many sectors, including international NGOs, health and social care charities and arts and culture organisations, has been invaluable. The structured training path at Sayer Vincent enabled me to progress to manager level within two years of qualifying and gain a whole new set of transferrable skills to take away with me. The size of the firm meant that I was able to work closely with all managers and partners, who really are experts in their fields, and had brilliant role models to aspire to. I have stayed in touch with many of my colleagues from Sayer Vincent and they are always happy to provide support, advice or specialist technical knowledge over a coffee.
Making a difference and working in the sectorThere was no doubt in my mind that I wanted to stay in the charity sector when I moved on from Sayer Vincent. I was keen to experience the other side of charity finance: working within a charity and being audited myself. For me, the opportunity to get to know a charity inside out, rather than the whistle-stop nature of audit, has been fulfilling and a great career move. I learnt an incredible amount as Finance Manager at Help Musicians UK and have recently taken that experience with me to my new role as Head of Finance at Painshill Park Trust.
What advice would you give to those interested in starting a career in charity finance?I would definitely recommend audit as a starting point to any finance career as it provides variety in both working environment and knowledge. I would also recommend working in a charity for a period as it equips you with a depth of knowledge that is useful even if you later return to audit. Other than working with fantastic colleagues and feeling that I’m helping people just by doing my job, I love the technical side of charity finance. Many people would run a mile at the mention of partially exempt VAT or restricted funding, but I genuinely enjoy their complexities. Corporate accounting has always seemed rather dull in comparison!
Whats been the highlight of your career so far?My favourite part of being the lead finance person in a charity is working with all other departments to prepare budgets, helping them better understand their management accounts and report to trustees. During my time at Help Musicians, we made significant progress towards non-finance colleagues taking ownership of their budget areas and I am about to embark on a similar process at Painshill.
“Many people think accountants are simply ‘bean-counters’ but, in reality, there is a huge focus on understanding how best to work with different types of people, many of them without a finance background.”It is immensely rewarding to play a part in enabling the programme team to help more beneficiaries, the fundraising team to raise more money and the landscape team to restore our magical crystal grotto.
Review of charities’ reserves policies The Charity Comission reviewed charity reserves policies from a sample of 106 accounts for charities with income over £500k. 64% fully met the requirements to explain the charity’s policy on reserves, state the level of reserves held and state why reserves are held. Only 22% correctly stated the level of reserves held. The CC will recommend to the charity SORP making body that guidance on the calculation of reserves is improved. Change your charity’s financial year New Charity Commission guidance on how to change a charity’s financial year and the restrictions on changes. There are two sets of rules (1) for CIOs and unincorporated charities (2) for incorporated charities. Fraud Advisory Panel help sheet: Legacy fraud Guide for charities on legacy fraud covering what it is (charities do not receive the correct amount due), who carries it out, how it is carried out, and the basic controls, checks and warning signs for charities. NCVO: Brexit and the voluntary sector, preparing for change Considers the risks and opportunities for charities of Brexit and includes a charity Brexit checklist. The main risks are identified as economic impact, employing EU27 nationals and EU funding. The main opportunities are reform of the VAT, state aid and public procurement rules. OSCR: Changes to charity accounting requirements The Scottish Government is to update the Charities Accounts (Scotland) Regulations 2006 to bring them into line with SORP update bulletin 2. The changes will affect larger charities (income ≥ £250,000), all charitable companies, and charities that use the Housing and Higher & Further Education SORPs. Once the changes have been made, OSCR will provide more guidance.
In our newsletter this month, we give you the latest charity finance news including updates on key aspects affecting charities in the recent budget announcement. We also provide the latest updates on VAT, tax and SORP. We have linked our latest articles including the series of blogs written for Charity Fraud Awareness Week, and we hear from another SV alumni. Click here to view our newsletters and sign up to receive them direct to your inbox each month.
Making Tax Digital for VAT Organisations will be required to comply with Making Tax Digital (MTD) for VAT from 1 April 2019. However, HMRC has recently announced that the start date will be deferred by 6 months to 1 October 2019 for a number of different types of entity including: – Trusts – Not for profit organisations that are not set up as a company – VAT groups However, the MTD VAT soft landing period ends on 1 April 2020, and there will be no 6 month extension of this. If you have any questions on what you’ll need to do to comply with MTD for VAT, please get in touch with us. As a first step, we recommend you get in touch with your accounting software provider to make sure they will be making the necessary updates to the software. VAT on e-publications Currently printed publications are zero-rated, but the same publications in electronic form are standard rated. However, the EU has just announced that it will permit member states to tax e-publications at the same rate as printed publications. It is not yet clear whether the UK will make this change. If it does, then one type of organisation it could impact on is membership organisations who provide a package of different supplies in exchange for a subscription fee. Apprenticeship levy Under the current apprenticeship levy rules, employers can transfer up to 10% of their unspent funds to another organisation. However, from April 2019 this limit will increase to 25%. Organisations with unspent funds should therefore consider whether there are any other organisations with a similar mission who could benefit from the funds. After 24 months, the government removes any unspent funds from an employer’s account. Government Gateway Services on the Government Gateway are gradually being moved to replacement services. All services will have moved by March 2019. Find out here how to get access to all HMRC online services. Budget announcements The 2018 budget took place on Monday 29 October. Key announcements for charities included: – From April 2019 the small scale trading limit (which exempts non-primary purpose trading from corporation tax) will increase from £50,000 to £80,000 per annum (for charities with turnover above £200,000). – From April 2019 the government will introduce a package of measures to reduce the administrative burden of the Retail Gift Aid Scheme for charities. – From April 2019 the limit on the size of a single donation eligible for the Gift Aid Small Donations Scheme will increase from £20 to £30. Further details on the budget can be found here.
Kristina joined Sayer Vincent in 2009 as an audit trainee and qualified in 2012. Since then, she has focused her career in the charity sector working for several large organisations and is now Financial Controller at Sainsbury Family Charitable Trusts. Kristina has also taken up the opportunity to give back to the sector and gain more experience through her role as a trustee. Let’s hear from Kristina about her time at SV and what she’s been up to since leaving the firm:
How was your time training and working at Sayer Vincent?I’m sure most who have gone through the process will agree that training and studying is not easy! However, the structure and support offered at Sayer Vincent was brilliant. The intake of trainees was relatively small when I joined and there was a real sense of camaraderie. We supported each other through exams and developed a great network throughout our time together.
Are there any key lessons learned from your time at SV?I would recommend taking advantage of opportunities as much as possible. During my time training as an auditor, I took the chance to work on internal audits and other assignments including governance projects, this gave me a much broader perspective. I’ve been able to transfer skills learned through these experiences to my work in other charities after leaving SV. One of the key transferrable skills I gained was the ability to quickly identify problems and risks and analyse things from a different perspective.
How has your training at SV impacted on your career?Whilst training as an auditor, I was required to interact with very senior people on a regular basis. I used my analytical skills to ask the right questions during audits to get to a conclusion quickly. I developed excellent communication skills while interacting with people from finance staff to CEOs – this was helpful especially when the time came to ask difficult questions. Developing these soft skills early on in my career was a great benefit of the audit training and these skills have been highly transferable. Audit trainees at SV are given a lot of responsibility from an early stage. I began leading audits and going out to some clients on my own as a second-year trainee. This really built up my confidence and helped me to realize I could do more than I thought I could. I also greatly developed my ability to problem solve and think through problems logically.
“I met so many bright, talented people at SV, everyone was very dedicated. Continuing my career in finance within the charity sector, I seem to regularly cross paths with colleagues I trained with or contacts made during my time at SV. I have managed to naturally build a strong network of charity finance professionals, which has been brilliant and very helpful throughout my career. I’m always pleased when I bump into another SV alumni!”
What advice can you give to those seeking a role in charity finance?Think about what you really enjoy doing During my time at SV, I was exposed to such a wide variety of clients across the social purpose sector which gave me amazing insight into how different organisations work. I’d advise future trainees or those aspiring to work in the sector to really think about what they would like to do in the future as there will be opportunities to develop key skills in any particular area of interest. It’s not just about the money Don’t be motivated by just salary or fancy job titles. Really think about what you enjoy doing and have a passion for, that approach will take you a very long way in your career. During my time at SV, I found that the sooner you identified your interests, the sooner support could be given towards achieving that goal. Take up as many opportunities as possible I had recently started a new job as Senior Financial Accountant at the Royal College of Nursing when I took up the opportunity of a nine-month secondment in the business accounting team. It probably wasn’t ideal timing as I was new in my role, but great opportunities don’t always come around. My experience there helped me gain a broader picture of accounting practices and awareness of the sector. In my current role with Sainsburys Family Charitable Trusts I now do both financial and management accounting – this role might not have been possible for me if I hadn’t taken up the secondment opportunity early on in my previous role. Never stop learning As a finance professional you can never stop learning. While I was at SV I also achieved my certificate in charity accounting and finance (CIPFA). I found the overlap between accounting and law very interesting and wanted to learn more, so I gained a certificate in charity law and governance (ICSA). Some of the non-finance training I have completed has been particularly beneficial and served as a learning curve. It’s also helped me to bridge the gap because finance is not an isolated part of an organisation so it’s very useful as an accountant to get out into the business more and understand various aspects outside of finance.
The Chancellor announced the government’s budget on 28 October 2018. It is great to hear that the Chancellor plans to help charities by increasing the annual limit for trading in a charity from £50,000 to £80,000 turnover (for charities with income over £200,000). This takes it very close to the VAT registration threshold of £85,000 so almost aligning these which is helpful. In addition the decision to allow charities operating Retail Gift Aid to write to those whose donations raise under £20 a year, just once every three years rather than annually as at present, will save charities many thousands of pounds in administration and postage costs. Charity Tax Group was hoping the requirement to write would be removed altogether for these donors. However once every three years is much better than annually and HMRC does remain concerned that, with over 40% of adults not being tax payers, too often gift aid is claimed by non-taxpayers. Click here to download our summary of the key changes affecting charities and social purpose organisations.