The Not for Profit sector is dealing with continued challenges from numerous directions. Changing legislation is placing a cost burden onto organisations already struggling with funding issues. Governance continues to be key in maintaining and developing a successful organisation, being alive to taxation changes has become imperative and the charity regulators are adopting a more rigorous approach.
Our year end guide summarises some key tax and financial planning tips which should be considered prior to the end of the tax year on 5 April 2017 or for companies, the end of the financial year on 31 March 2017.
The basic criteria to qualify as R&D relies on the project seeking to achieve a scientific or technological advance while attempting to overcome scientific or technological uncertainty. Qualifying R&D must also be:
The Broomfield & Alexander grants team has had another busy year. During 2016 we assisted clients with securing approximately £3 million of grant funding mainly for projects that involve capital expenditure and job creation/safeguarding but also for Research and Development projects.
With record levels of inward investment, including high profile investments by Aston Martin and TVR, an improving economy, lower unemployment rates and increasing budgetary pressures, the Welsh Government is becoming much more selective in relation to the types of project it will support and the amount of grant funding it will make available. In addition, there is now more of a drive towards repayable grant funding than there has been previously.
Broomfield & Alexander’s Corporate Finance team are celebrating a record 2016, completing the most transactions in their history in a single year and topping the Experian MarketIQ report as the most active Corporate Finance advisor in Wales for the second year running. Our work has included dealing with a large number of local sale and acquisition transactions as well as assisting with acquisitions by clients in the US.
The Charity Commission and the new Fundraising Regulator have issued a joint alert, warning charities to “immediately cease” any fundraising activity that breaches the Data Protection Act.
The recently revised guidance on fundraising, CC20, was also highlighted as important for charities to follow. (more…)
Set out below is our round-up of charity accounting and reporting in 2016, and our reflections on this year of significant change.
1. FRS 102 and the New Accounting Framework
This was the big news this year! After more than two years of anticipating the adoption of Financial Reporting Standard 102 and the revised Charities Statements of Recommended Practice (SORPs), this year has been the year of implementation (accounting periods starting on or after 1 January 2015) – and many charities (and to be fair auditors as well) have found that, no matter how well prepared, there are always practical issues where what seemed clear on first reading proved confusing, or unanticipated issues emerged. It should be said, however, that for some charities the change occurred almost unnoticed, reflecting the evolutionary nature of these SORPs.
In November the Charity commission finally published its findings on the Cardiff charity AWEMA. These stories are always more interesting when they are on your doorstep, so we have summarised the main points for you consider. It’s always worth reviewing the findings of these cases and benchmarking your own organisation to them to see if there are any issues inherent in your organisation that could give rise to similar risks.
With commodity prices fluctuating wildly in recent years, profits (and hence tax liabilities) can also fluctuate from one year to the next. Given the HMRC payment on account system, this can mean that your tax bill is higher than necessary.
Payments on account are calculated as 50% of the prior year’s tax bill, with one payment due by 31 January of the tax year, and the other payment due by 31 July after the end of the tax year. If your income levels remain the same as the previous year, payments on account effectively spread the cost of your tax bill into two instalments over the year. Of course this also means that HMRC get your money earlier!
HM Revenue & Customs (HMRC) are changing the way they collect tax information. The changes, referred to as Making Tax Digital (MTD), are billed as a “digital revolution” that will “transform the experience of millions of taxpayers”. The changes will come into force from April 2018 with plans to deliver a full digital tax service by 2020. At the heart of MTD is the requirement to maintain digital records and report this to HMRC at least quarterly.
You may be thinking “That’s interesting, but it won’t affect us, our charity doesn’t pay tax on earnings” and you are probably right. However, the impact this will have on the sector is not yet clear; some will be affected, and all will need to monitor the situation.