Don Bawtree: Get yourself ready for fee-charging

Plus: fundraising agencies, non-charitable entities and expenses

Don Bawtree
Don Bawtree

It is hardly a surprise, after the power was first introduced in 1992, that the Charity Commission is considering introducing fee-charging, if only for larger charities. For those that are watching every penny, there might be some transactions with the commission they should sort out before the free regime comes to an end.

Fundraising agencies

As another fundraising agency goes to the wall, charities should consider if there is any risk to them relating to Gift Aid records. HM Revenue & Customs expects charities making Gift Aid claims to provide valid declarations, but there is a risk of these being inaccessible if they are held or maintained by third parties that are no longer trading. Charities should check that all the records supporting their claims are under their own control.

Non-charitable entities

The Charity Commission has issued two pieces of guidance on financial transactions with non-charitable entities. In view of press comments on commercial partnerships, the commission is forthright: it expects "that trustees review any current arrangements to satisfy themselves they remain in the charity's best interest". Add this to the finance committee agendas.

The other piece of guidance relates to charities granting money to non-charitable organisations. Here the official guidance has been reiterated, with an emphasis on proper due diligence and risk assessment. There is nothing in principle to stop a charity from providing funds to a non-charitable entity, and for some charities operating overseas this is unavoidable. Nonetheless, there is a greater risk of the funds being used for non-charitable purposes, and trustees need to consider the new guidance carefully.


As a major Scottish charity hits the headlines over executive expenses, it is timely to revisit the guidance commissioned by the National Council for Voluntary Organisations and the Charity Finance Group in February 2010. This was issued in the light of MPs' expenses and "duck house-gate", but over recent years has been applied by only a few charities because the storm appeared to have passed. As charities focus on remuneration disclosures this year, it might be worth putting in a clear statement on executive expenses as well.

Gift Aid

HMRC is proposing changes to the incredibly complicated Gift Aid donor benefit rules after a consultation. Options include removing the monetary thresholds altogether, operating instead some form of gross basis applied to all donations, or reducing the monetary thresholds to just one, based on a percentage of the relevant donation. Welcome simplification ideas include ignoring low-value benefits and dropping the lifetime benefits rule. The consultation closes on 12 May.

Trading subsidiaries

At long last HMRC, the Institute of Chartered Accountants in England and Wales and the Charity Commission have issued revised guidance to deal with the vexed issue of trading subsidiaries making Gift Aid payments from negative reserves. The guidance follows previous discussions, but makes it unlikely that a charity or a company will have a historical tax liability.

However, the guidance is equally clear that donations from negative reserves will in future trigger tax liabilities as well as legal issues. For charities having to fix historical problems, the detailed guidance will need to be looked at carefully - and professional advice taken.


There has been a rather confusing announcement about accounts tagging and iXBRL. With a newly developed taxonomy it will now be possible for charities to file with HMRC under the FRS 102 Statement of Recommended Practice, and hopefully in the future with Companies House and the Charity Commission. This is a small step, perhaps, but at least it's one that takes us some way towards better transparency and comparability across the sector.

Don Bawtree is lead partner for charities at accountants BDO LLP

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