1. October 2012 News and Views from Plummer Parsons
CHARITY
newsletter…
The responsibilities of being a trustee are becoming more and more onerous as greater
regulation is introduced. This Charity Newsletter addresses three key areas which are of
increasing importance. Please do not hesitate to contact us further about this or any other matter.
Incorporation of Trustees
Why should your charity consider incorporation?
Many charities are set up as trusts. Within Please note that this form of incorporation does not
this structure all investments, properties and give the trustees limited liability.
contracts that the charity own, are assigned 3. Charitable Incorporated Organisation (CIO)
to the individual trustees. This can lead to
A CIO is an incorporated form of charity which is
administrative and legal problems as the
not a company, which only has to register with the
trustees become personally liable for these.
Charity Commission and not Companies House.
When trustees join or leave, all deeds, contracts, It can enter into contracts in its own right and its
shares etc. have to show the change in the legal trustees will normally have limited or no liability
ownership. If this is not completed properly for the debts of the CIO. This form of entity is not
this can lead to legal complications where yet available and has been discussed for many
previous trustees could end up having continuing years. A recent announcement has been made
liability and the charity itself may struggle to regarding the likely timetable for introduction, see
prove ownership. our blog for further details so be sure to subscribe
at www.plummer-parsons.co.uk/blog
Possible solutions to these problems:
1. Incorporation of the charity
A company limited by guarantee is set up and the
charity transferred to it. This can be extremely
beneficial as it means that the charitable company
holds the title deeds in its own name. In addition
limited liability means that the company will be Tax tips – a section on practical tax tips covering
treated as a separate entity so if any liabilities the family, businesses, selling assets and tax
efficient savings.
cannot be met, the trustees/directors are not
personally held liable. This does require the charity A range of tax calculators – gross pay to net,
self employed tax due, VAT due, corporation tax
to comply with company law under the Companies
due, company car and fuel benefits, SDLT due,
Act 2006 and comply with all statutory matters, loan repayments and mortgage repayments.
in addition to the normal Charity requirements.
Tax rates – key tax rates tables with explanatory
It is also worth noting that some Charities may not notes so we can now keep you up to date on the
be able to incorporate as a whole as it is forbidden current tax position, such as the latest advisory
in the trust constitution. fuel rates which are reviewed quarterly.
2. Incorporation of the trustees Key tax dates – a reminder of key tax dates that
can easily be added to your calendar.
An application is made to the Charity Commission
to incorporate the trustees under the Charities Act Regular news updates – a newsfeed to keep
you regularly updated on topics that matter to
2011. The Charity Commission then establishes
your business. Links to our social media
the corporation and grants the Certificate community so that you can join in the
of Incorporation. conversation and add your thoughts to ours.
The Incorporated Trustees is only there to hold the www.plummer-parsons.co.uk/taxapp
assets for the charity in that name. This means that
trustees can be appointed/removed in the usual Available for iOS and Android
process and have the same duties as before mobile phones and devices.
without the continual administrative burden.
www.plummer-parsons.co.uk/charity

2. October 2012 News and Views from Plummer Parsons
CHARITY
Gift Aid and the potential pitfalls
Gift Aid allows charities to increase the value of monetary gifts from UK tax payers
by a quarter through claiming back the basic rate tax paid by the donor.
To obtain Gift Aid a charity must register with HM Revenue
and Customs (HMRC) and obtain a Gift Aid declaration from
the donor to support the charity’s tax claim. The wording on
Gift Aid declarations has recently changed so charities need
to ensure that their declarations are complete and correct
otherwise tax may be clawed back from the charity by HMRC.
Gift Aid can only be claimed on monetary gifts, so donations of goods
and services will not qualify. Donations from limited companies do not
suffer tax at source so you cannot claim back tax on such donations.
HMRC can periodically carry out Gift Aid visits to ensure that a charity
meets its obligations with regard to record-keeping and the retention of
Gift Aid declarations. Records need to be kept for 6 years following the
end of the tax year to which they relate and there must be a clear trail Modest tokens of appreciation can be given to donors but there are strict
from the R68 tax claim back to the banking of the donation and the limits on the value of such benefits. Where these limits are exceeded then
donor’s Gift Aid declaration. Cash donations are a particular problem so the donation does not qualify for Gift Aid. These rules also apply where
you should consider using an envelope scheme to record the donor and benefits are received by a relative or company connected to the donor.
amount given. These envelopes need to be retained. The Gift Aid If you are concerned about the adequacy of your Gift Aid records or
treatment of small cash donations is due to change from 6 April 2013, have any questions regarding the above, please contact one of our
although how this will be operated has yet to be published. charity team.
Support costs – are your
charity’s accounts transparent?
When it comes to support costs and overheads the Charity Commission states
in its Statement of Recommended Practice (SORP) :-
➜ The notes to the accounts should provide There are many charities that do not disclose
details of the total support costs incurred this information correctly leading readers of
and of material items or categories of their accounts to believe that all income is
expenditure included within support costs. spent on charitable activities. This is obviously
misleading and can not only affect public budgeting and accounting, information
➜ Where support costs are material, an
perception of a charity but also its success technology, human resources, and financing.
explanation should be provided in the
in grant funding applications.
notes of how these costs have been There is genuine public interest in the level of
allocated to each of the activity cost Support costs are defined by the Charity support costs incurred by a charity in carrying
categories disclosed in the accounts. Commission as those costs that, whilst out its activities, which is why it is more
necessary to deliver an activity, do not important than ever for your charity to put an
➜ The accounting policy notes should themselves produce or constitute the output emphasis on measuring, demonstrating and
explain the policy adopted for the of the charitable activity. They can include the communicating its results. To discuss your
apportionment of costs between activities central or regional office functions such as reporting and disclosure responsibilities contact
and any estimation technique(s) used to general management, payroll administration, our team of specialists today.
calculate their apportionment.
Have we missed anything? Please address all enquiries, responses and
other issues raised by this newsletter to:
Is there anything in this Newsletter that you were expecting or hoping
to read? Please do not hesitate to contact us direct as we will be more
charities@plummer-parsons.co.uk
than willing to provide you with extra information etc. Email us the details of others who
would like to receive this newsletter.
Eastbourne Hailsham Brighton Alfriston
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eastbourne@plummer-parsons.co.uk hailsham@plummer-parsons.co.uk brighton@plummer-parsons.co.uk alfriston@plummer-parsons.co.uk