The Budget has been and gone, but there were a few snippets for charities that will be useful when they come into force next April. One measure that many charities will find useful is the extension of the upper tax-free trading threshold to £80,000, although with trading income below £200,000 there will continue to be scale applied. Other changes included some simplification of the retail Gift Aid scheme and an extension to 4 January 2019 of the deadline for applications under the VAT refund scheme that allows galleries and museums to reclaim VAT incurred on most costs relating to free admissions. The Gift Aid Small Donations Scheme limit has been raised to £30.
The Charity Tax Group has distributed a section from a recent HM Revenue & Customs letter setting out what it considers to be its final view on a complex area. Charities involved in digital promotion or advertising might wish to review their arrangements if this does not accord with their current understanding: "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."
The Welsh government has published responses to its consultation on business rates, including comments on charitable reliefs. The sector will be relieved to see that there are no proposals to change either mandatory or discretionary relief. However, the Welsh government will remove relief on empty properties that, when they are next in use, might appear to be used for a charitable purpose.
Still on property, it is good to see that the government does not intend to change the current exemption to the Community Infrastructure Levy.
The Financial Reporting Council has launched a review of corporate reporting amid concerns that over-long annual reports are straining relationships between companies and their stakeholders to "breaking point". The same might be said for some charity reports, and trustees might wish to follow developments. The FRC will publish its findings later next year.
The Charity Commission has reissued guidance on how to change a charity’s financial year-end, starting with the rather tart reminder that you cannot do so if your accounts are overdue. Charitable companies can shorten their financial year as often as they like, with a minimum period of one day. They can lengthen the period by up to 18 months, but only once every five years. Other charities can adopt periods of between six and 18 months, but can make a change only every three years.
The third annual Charity Fraud Awareness Week has finished. The main aims of the week were to raise awareness of the key risks affecting the sector, promote and share good counter-fraud practices, and promote honesty and openness about fraud. The regulator’s website is consequently now teeming with new material on fraud, some of which trustees will find useful. Topics covered included due diligence processes around sources of income, knowing your staff, moving money around, cyber security and whistleblowing. These are supported by videos of admittedly varying quality on other topics, such as crowdfunding, creating counter-fraud frameworks, and insider and banking fraud.
As I write, the Brexit process is looking increasingly likely to result in a hard and abrupt exit rather than a smooth transition. It is impossible to predict the ramifications, but clearly trustees do now need to consider seriously the financial impact of such an event. Some charities might be spared any direct impact, such as investment and sterling volatility, which could also affect pension positions, staff availability or access to EU funds. However, all organisations could be affected by supply chain disruption, slower legacy realisations, falls in donor confidence and inflationary pressures. Some of these factors will also no doubt lead to greater calls on charities to provide support. It is difficult to identify any meaningful opportunities, as opposed to threats, in the current scenario.
Don Bawtree is lead partner for charities at accountants BDO LLP