Don Bawtree: Keep an eye on two new proposals to reform charity accounting

Also: a looming Making Tax Digital deadline; the NCVO's almanac; and a new Code of Fundraising Practice

Don Bawtree
Don Bawtree

The Statement of Recommended Practice governance review has been published. This review was set up amid debate about the whole purpose and usefulness of the accounting "standard" and the number of regulatory interests now involved. When the Sorp was originally drafted there was just the one specific charity sector regulator for England and Wales. Now, with the Sorp’s application in the Republic of Ireland, there are four regulators to be considered.

The recommendations are sensible and unexciting, and any changes to the Sorp will follow on only from any changes made to the committee structure in due course. Two points are worth watching: the idea that the accounts and annual report need to be aimed at "proxies" – such as the media – rather than the end user of the accounts; and a second line of thought that implies technical excellence is a luxury for the few, whereas smaller charities might operate to a different level of accountability. Both of those ideas have some merit, but are also fraught with hazard.

Code of Fundraising Practice

The Fundraising Regulator has issued a revised Code of Fundraising Practice, due to come into force in October. The focus has been on making the code more understandable rather than changing it, with a welcome emphasis on using plain English. The aim is that both charities and the donating public can know what to expect from ethical fundraising.

Charities should note that fundraising complaints – and related disclosures in annual reports – will be measured against the old code until the new code is effective. There is also a reminder that trustees need to be aware of differences in law in England and Wales, Northern Ireland and Scotland: comparing the definition of a "public place" alone is a lifetime’s study.

The almanac

The National Council for Voluntary Organisations has published its UK Civil Society Almanac 2019. Financial points of interest include the generally continuing health of the sector, with asset bases rising mainly because of stronger investment platforms.

The less good news is the continuing impact of pension liabilities for some. And, although the public is the largest source of income, NCVO says that for the first time in six years there has been a small fall in earned and donated income from the public. On the other hand, legacies continue to rise.


HM Revenue & Customs has reminded VAT-registered organisations, which are due to start operating Making Tax Digital from April 2019, that their first quarterly MTD returns need to be sent to HMRC by 7 August. HMRC said that, across the whole taxpayer base, 325,000 registrations and 180,000 VAT submissions have so far been received, suggesting that there is still a large number of taxpayers yet to register. Some charities are deferred, but will have been notified of that by now. Others should not leave it too late to register for MTD.

HMRC has also started to inform those charities that will need to complete income or corporate tax returns this year. There are 3,000 of them, principally those making the largest Gift Aid claims, as well as some community amateur sports clubs. In due course these charities will need to complete the relevant form (CT600E), but for the moment HMRC is simply putting charities on notice.

The Budget

Somehow I missed the Chancellor’s Budget proposal to provide rates relief on public lavatories. However, the Non-Domestic Rating (Public Lavatories) Bill was introduced in the House of Lords on 18 June 2019. Some charities will be able to obtain relief where this was not previously available and might wish to review their property estates. The proposals are limited to England and Wales, and do not extend to all buildings – for example, lavatories in libraries will not benefit. On the other hand, as with other rates reliefs, the building does not have to be exclusively used as a public lavatory: "mainly used" will also qualify.

Don Bawtree is lead partner for charities at accountants BDO LLP

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