Charities Newsletter - Summer 2015 by Lauren Aston

RAFFINGERS STUART CHARITIES NEWSLETTER SUMMER 2015

LATEST

INSIGHTS

Six Key Steps to Forming a Charity

Claiming Employment Allowance in the New Tax Year 2015/2016

What do the 2015 Charity Audit Thresholds mean for Charities?

Many charities are rejected each year by the Charity Comission due to improper structure.

Employees to save up to ÂŁ2,000 by reducing the amount of National Insurance Contributions.

On the 31 March 2015, increases to the thresholds for charity auditing came into action.

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Contents

Welcome and Partners

Special Feature Six Key Steps to Forming a Charity

Bookkeeping Made Easy

Claiming Employment Allowance in the New Tax Year

Employee Spotlight

SMALL DETAILS BIG DIFFERENCE

Golf Day 2015

Client Story Jigsaw Trust: Payroll Case Study

Submitting Accounts on Time: BFON Trust face Statutory Inquiry

Charities (Protection and Social Investment) Bill

What do the 2015 Charity Audit Thresholds mean for Charities?

Welcome to our CHARITIES SUMMER Newsletter

We are extremely excited to welcome you to the very first edition of the Raffingers Stuart Charities Newsletter. We have designed this newsletter to be bespoke to the charity and Not-for-Profit sector, bringing you the very best, timely and relevant information. In this first edition, we feature articles on How to Form a Charity, Claiming Employment Allowance in the New Tax Year and understanding the latest Charity Audit Thresholds. We also discuss the importance of Submitting Charity Accounts on Time and a case study from one of our charity clients on how our services have helped them. We hope you enjoy reading this newsletter. If you have any suggestions for topics that you would like to see discussed in the next edition, please do get in touch. The Partners at Raffingers Stuart

Raffingers Stuart Partners

Gary Inglis Managing Partner gary.inglis@raffingers-stuart.co.uk

Andrew Coney Partner andrew.coney@raffingers-stuart.co.uk

Lee Manning Partner lee.manning@raffingers-stuart.co.uk 2 Adam Moody Partner adam.moody@raffingers-stuart.co.uk

Suda Ratnam Partner suda.ratnam@raffingers-stuart.co.uk

Barry Soraff Partner barry.soraff@raffingers-stuart.co.uk

Paul Dell Partner paul.dell@raffingers-stuart.co.uk

RAFFINGERS STUART CHARITIES NEWSLETTER SUMMER 2015

Six Key Steps to Forming a Charity SPECIAL FEATURE

Although 1,000’s of new charities are established each year in the UK, many are rejected by the Charity Commission due to improper structure or failure to meet charity standards. To ensure you avoid this, follow our six key steps.

1. Is it a Charity? Recognising the Need and Benefit Charities are organisations created with the aim of benefitting the community. Therefore, it is important, first and foremost, to identify what needs your charity is addressing and what benefits you are bringing to the community. 3

To be considered a charity, your organisation must follow two legal requirements: ● Have only ‘Charitable Purposes’ ● Be of a ‘Public Benefit’ This means that all of the aims of the charity must be exclusively charitable and everything you do must have social, recreational, educational, or charitable benefits.

2. Choosing a Name Choosing the name of your charity can be somewhat difficult. You cannot have the same name as another charity, which can be avoided by using the Charity Commission’s ‘Register of Charities’. It is also important to be aware that if you use the word ‘Charity’ or a variation of the word, e.g. ‘charitable’ or ‘charities’, you must request permission from the Charities Commission and you must be authorised to be acknowledged as a charity before you begin using the title.

SMALL DETAILS BIG DIFFERENCE

3. Who are Your Trustees? Trustees are responsible for ensuring that the charity meets the aims and objectives it was set up to do. Every charity registered in the UK must have a minimum of three trustees to help run the daily activities of the business. It is likely that the trustees embrace a combination of skills and/or expertise, which benefit and reflect the interests of the charity.

4. Writing a Governing Document A Governing Document outlines the charity’s plans, activities and purposes and acknowledges any provisions required for the business. This legal document should include: ● The charity’s purpose and what will be done to achieve this purpose ● The charity’s aims

● Who runs the charity and who can be a member ● How meetings will be held ● Paying trustees, investments and holding land ● Amendment provisions to the charity ● Dissolution provisions for the charity ● Number of trustees needed to make decisions and recruitment of trustees ● Charity finances, land, property or investments and accounts ● Resolving disputes within the charity

5. Deciding the Charity Structure The structure of the charity determines how it will operate, run and practise. There are four main structures that a charity can adopt: ● Trust ● Charitable incorporated Organisation(CIO) ● Charitable Company Limited by Guarantee ● Unincorporated Association The structure that one chooses to adopt is defined by the Governing Document.

6. Funding your Charity To be considered a charity, depending on the charity structure, you must have a minimum income of £5,000. This can be done through fundraising through a range of different avenues. It is also essential to correctly account for the funds raised through fundraising, by setting up a charity specific bank account and maintaining your charity’s accounts.

For further information on the requirements for forming a charity please contact Suda Ratnam at suda@raffingers-stuart.co.uk.

Bookkeeping Made Easy You can be relieved of a significant burden by taking care of all your bookkeeping and accounting needs with Xero and Crunchboards. With Xero, weekly or monthly management accounts can be prepared immediately, meaning that you are always aware of your current trading position; you can also monitor the profitable areas of your business and improve those areas that are struggling. CrunchBoards work alongside Xero... What makes CrunchBoards so valuable is that every transaction from the beginning of time can be imported, which means absolutely any dataset (KPI) can be looked at in real-time for operational, retrospective or future analysis. And, if anything is amiss, you will be the first to know. We find this software saves our client’s time as they can create anything from simple budgets to complex forecasts instantly and in a format that suits them. Essentially, Xero and CrunchBoards give you back control, through giving you instant, up-to-date financial information about your business, helping you to grow and become more profitable. For further advice or to request a trial, please contact Lee Manning at lee.manning@raffingers-stuart.co.uk.

RAFFINGERS STUART CHARITIES NEWSLETTER SUMMER 2015

Claiming Employment Allowance in the New Tax Year Businesses and charities can continue to benefit from the employment allowance in the 2015/16 tax year. The current legislation enables employees to save up to £2,000 through reducing the amount of National Insurance Contributions (NICs) a company is required to pay for their employees. Under the current legislation it was claimed that up to 1.25 million businesses and charities could benefit and nearly a quarter of a million businesses or charities will be exempt from paying any NIC. So, are you claiming?

Who can Claim? You can claim employment allowance if your business, community amateur sports club or charity is paying employee Class 1 NICs. However, the claim will only be accessible to businesses or charities that fall specifically under one of these categories: ● Domestic Employees ● Public Authorities 5

● Businesses with a wholly or public nature ● Employees claiming through connected business or charity

Already Claimed in the 2014/15 Tax Year?

● Personal service companies

If an EPS was sent in the 2014/15 tax year, you do not need to notify HMRC again for the current tax year. The employee allowance will remain activated on both HMRC systems and on your payroll software. This will also apply if the payroll is being transferred from one payroll software to another. As it is already recognised on HMRC’s system, you will not need to make a new claim.

● Serviced companies Your business or charity will only be able to claim the allowance for one PAYE scheme. If your business or charity is claiming under a group, only one company from the group will be able to make a claim.

How to Claim You can make a claim at any time in the tax year through yours or your accountant’s payroll software. This can be done by simply selecting ‘YES’ in the ‘Employment Allowance Indicator’ section of your payroll software next time you are due to send an Employer Payment Summary (EPS) to HMRC. For those employers who still submit their returns to HMRC on paper, a paper process will be available which will mirror the IT procedures.

You will only ever need to notify HMRC once in order to activate the employee allowance. If you do stop being eligible, you will need to notify HMRC as soon as your eligibility ends. It is important to take individual advice in this area – if you want to discuss your particular circumstances please contact Paul Dell at paul.dell@raffingers-stuart.co.uk.

Golf Day 2015 When: Wednesday 16th September 2015 Where: Toot Hill Golf Club

Employee Spotlight In this slot we would like to introduce you to a valued member of our team, allowing you to put a face to a name. This quarter we visit our Payroll Apprentice, Georgia Tear. Name: Georgia Tear Nicknames: Gee DOB: 28 May 1997 Career history: As I have only just left school, I do not have a long career history as I am still developing new skills and experience in my current position at Raffingers Stuart. However, prior to my position here, I carried out work experience at NHS offices administrating medical records. Since starting at Raffingers Stuart in August 2014 as an apprentice, I have been given plenty of opportunities to develop my skills in the payroll field whilst being supported every step of the way by a great team. When my apprenticeship ends in August, I hope to continue my journey at Raffingers Stuart and start a CIPP course.

Following the success of our 2014 Annual Charity Golf Day, we are pleased to announce that our ninth Golf Day will be held on Wednesday 16th September 2015 at Toot Hill Golf Club. As always, the event will bring together colleagues, clients and friends of our firm. With all money raised being donated to our chosen charity, The Lauren Page Trust. This year, the Golf Day will be £70 per person, which includes breakfast, 18 holes on this superb course, a 3 course meal and a donation to The Lauren Page Trust. There will be the usual competitions on the day with presentations for the following:● Nearest the Pin ● Longest Drive ● Overall winner ● Team prize If you would like to attend this event, please email lauren.aston@raffingers-stuart.co.uk.

Interests: Music is a huge factor in my life. When I am not working, I am listening to music. When I am not listening to music, I am singing! My favourite band has been the 1975 for years, so I am extremely excited to go and see them live later this year! I have also grown up with a family who are passionate about horse riding; I find it a great escapism. Partners Report: Georgia has been a baptism of fire. Having joined the payroll team in August 2014 as a payroll apprentice and the youngest member of our team, she has developed considerably and is fast becoming a payroll expert. With her ambition, talent (as well as her impressive pouting skills), Georgia has an incredibly bright future.

RAFFINGERS STUART CHARITIES NEWSLETTER SUMMER 2015

Jigsaw Trust: Payroll Case Study At Raffingers Stuart, we support large charities with their accounts, payroll and bookkeeping needs. Recently, we worked with Jigsaw Trust on their payroll processes, helping them to overcome their internal challenges and run more efficiently.

Jigsaw Trust is a large charity split into three divisions: ● Jigsaw CABAS® School is an independent day school for children and young people with an autism spectrum disorder. Based in Surrey, the school has 60 placements for students aged 4-19 and provides a 1:1 staffing ratio;

● Jigsaw+ extends Jigsaw’s provision to an adult audience over the age of 18. It offers educational, vocation and wellbeing services through its Centre for Lifelong Learning; ● Jigsaw Trust Café, established as a Social Enterprise, gives young people and adults with autism the opportunity to learn and develop valuable life skills in a genuine employment setting.

Ultimately combined, Jigsaw Trust has a team of 120 employees dedicated to improving the lives of those affected by autism.

The Challenge Running a large charity comes with many challenges. Jigsaw Trust has a responsibility to their pupils, yet they still have to ensure the charity is running efficiently and that the day-to-day administration burdens are being taken care of. Having a small HR team this, on occasion, proved challenging for the Jigsaw Trust and it became difficult to maintain the right balance between HR and the routine, but essential tasks, such as payroll.

*Kate Grant, CEO Jigsaw Trust, with members of her Senior Team at the School.

SMALL DETAILS BIG DIFFERENCE

The Solution Our solution was to take away the financial and administrative burden of these routine tasks, affording the team more time to spend on areas of greater interest and benefit to the charity. Jigsaw Trust found that choosing Raffingers Stuart was a very beneficial decision for them. Through using our inhouse experts for many of their daily tasks we are able to introduce new time-saving services, including: ePayslips - ePayslips save Jigsaw Trust not only time, but money too. Through this system the team can communicate securely with each other, as well as provide key documentation at the click of a button Bacs - the bacs service was introduced to speed up direct payments to employees, HMRC and suppliers. It also helped to improve the charity’s cash flow Auto-enrolment - auto-enrolment is compulsory for all businesses. We were able to help Jigsaw Trust set up their auto enrolment process and are helping to encourage their employees to utilise the current pension scheme and contribute to it. Through ensuring that everything is set up correctly, we have guaranteed that the Jigsaw Trust is on track to meet their staging date and will not be fined in the process.

“From a strategic perspective, we have found it invaluable having, not only the day to day support of Raffingers Stuart, but also access to their expertise and advice in helping plan our future growth most effectively.” Kate Grant, CEO, Jigsaw Trust For help or advice on your payroll processes please contact Suda Ratnam at suda@raffingers-stuart.co.uk.

Submitting Accounts on Time: BFON Trust face Statutory Inquiry The Charity Commission recently opened a statutory inquiry into BFON Trust. The inquiry was launched following the charity’s failure to file its annual accounts. Only last year, BFON Trust came out of a similar inquiry into charities that have failed to comply and submit accounts on two or more occasions. However, after submitting their outstanding accounts in June last year for the 2012 and 2013 financial years they have failed to submit their 2014 financial accounts, which were due by 31 January 2015. The charity is now facing a class inquiry against them due to their inability and failure to file their accounts for the third year running. Submitting accounts on time is mandatory, and therefore, failure to do so affects charities via: Accountability - Both the charity sector and the public are advocates for transparency in charity accounts. By submitting accounts on time, it helps to retain the public’s confidence in the charity sector. Failure to do so can promote governance issues and a lack of trust. Compliance – Charity accounts must be sent to the commission if a. the charity is a charitable incorporatied organisation (CIO) or b. the charity is a registered charity with gross income over £25,000. Failure to file in a timely manner is a criminal offence. Grant Funders – The inability to submit accounts hinders charities of any grants that they could be entitled to. Many funders, especially smaller ones, are less willing to invest extensively into a charity if they are not up-to-date with their annual accounts. Submitting accounts on time is imperative, which is why it is vital that you do not underestimate the importance of the legislations. If you wish to discuss your particular circumstances please contact Gary Inglis at gary.inglis@raffingers-stuart.co.uk. RAFFINGERS STUART CHARITIES NEWSLETTER SUMMER 2015

Charities (Protection and Social Investment) Bill Announced by Her Majesty the Queen, as part of the 2015 Queen’s Speech, The Charities (Protection and Social Investment) Bill, formerly known as The Draft Protection of Charities Bill, will provide the Charity Commission with stronger powers to tackle abuse and deliberate wrongdoing within the charity sector. On the 28 May 2015, the House of Lords officially introduced The Charities (Protection and Social Investment) Bill to address pressing matters that not only concern the charity sector directly, but also aim to restore the public confidence in charities. The Bill focuses on two key areas:

● Protection of Charities

● Investigating the charity and/or individual

● Power to Make a Social Investment

● The power to suspend

Protection of Charities The first section of the Bill focuses on ways to protect charities from abuse, as well as protect and maintain the public’s trust in the charity and not-for-profit sector. In reality, charities rarely face abuse; however, there are cases where charity donations are at risk and fraud and improper business practices have taken place. The new Bill gives the Charity Commission more power to deal with these situations, as well as the correct tools and practises to apply. The Bill places heavy emphasis on those who are - or look to be - a trustee or of a senior position. The aim is to protect charities from “People who present a known risk” and will therefore be extended to those with criminal offences. In order to protect charities, the Bill gives the Charity Commission the power to act and take measures where a charity is acting inappropriately. This includes: ● Giving out warnings

SMALL DETAILS BIG DIFFERENCE

● The power to remove or disqualify trustees ● The power to direct a ‘wind up’ of a charity ● The power to close down a charity after an inquiry

Power to Make a Social Investment A social investment is where a charity or organisation can make an investment that aims to achieve both a social and financial return. The Charity Bill requested the Law Commission to review the current legislation that makes it difficult for charities to make social investments, following this review a new legal power has been introduced to make it easier for charities to invest. The Minister for Civil Society, Rob Wilson MP, said: “Bringing clarity to the law in this area will make it easier for charities to participate and achieve a positive social impact with their investments”.

For further information on the new Bill please contact Lee Manning at lee.manning@raffingers-stuart.co.uk.

What do the 2015 Charity Audit Thresholds mean for Charities? On the 31 March 2015, The Charity Commissions’ proposal to increase thresholds for charity auditing came into action. The aim of the change is to not only help smaller charities gain access to support, but also to help relieve them of any regulatory burdens they may have.

What is Charity Auditing? In order to instil confidence in the public and charity sector as a whole, it is important for charities to provide clarity on their financial and business activities, which is achieved through an annual audit. It is a legal requirement for charities, defined as large, to be transparent about their accounts. Larger charities must therefore declare and have their annual accounts audited by a registered auditor.

The 2008 Threshold From April 2008, charities that are defined as small, had the opportunity to exempt themselves from undertaking an audit under the Companies Act. Therefore, an audit only needed to be undertaken if a charity met any of the following requirements: ● An annual income, from all sources, of more than £500,000 (“the income threshold”); OR ● Assets worth more than £3.26million and an income of more than £250,000 (“the asset threshold”)

What has changed? From the review of the Charities Act 2006, it was agreed that thresholds would increase and audits would only be mandatory if a charity had:

● Assets worth more than £5million and an income of more than £500,000 The Charity Commission also concluded that there would be an: ● Increased group income from £500,000 to £1million ● Increased preparation threshold for group accounts from £500,000 to £1million Extended list of professional accountancy membership bodies that are able to carry out examinations of accounts of charities with an income of more than £250,000. It is hoped that not only will these changes make it easier for charities to find an independent examiner, but also less charities will be required to have their accounts formally audited. It is therefore advised that charities review these changes, particularly those whose financial year has recently ended.

● An income of more than £1million: OR, one of either: ● Assets worth more than £3.26million and an income of more than £500,000

For further information please contact Andrew Coney at andrew.coney@raffingers-stuart.co.uk.

RAFFINGERS STUART CHARITIES NEWSLETTER SUMMER 2015

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