2013 in review: A round-up of small charity regulation

A very Happy New Year to you all from NfP Accountants! 2013 has been an interesting year. By the end of the year, it certainly felt like staying on the right side of the Charity Commission (as Wendy Cotton puts it) is something that no charity can afford to lose sight of. In the 2012/13 report on Tackling abuse and mismanagement by the Charity Commission, the sector regulator has pledged to take tougher actions going forward, and not just for late accounts filing, but also with respect to fraud, money laundering, governance, and other cases of charity mismanagement.

Some key changes in the regulatory framework for small charities

Gift Aid

Donations of goods: The year has seen a number of changes in the administration of Gift Aid. From April 2013, a single gift aid declaration was allowed for multiple donations of goods to a charity for resale (e.g. to a charity shop), to cover sales proceeds of up to £100 if the charity operates the shop directly, and £1,000 if the goods are sold by a trading subsidiary.

Small donations scheme: From 06 April 2013, the Gift Aid Small Donations Scheme was introduced, to allow charities to claim gift aid on small donations without a Gift Aid Declaration. A short Q&A and worked examples are available here to help explain the scheme.

HMRC online: An electronic system introduced by HMRC on 22 April 2013 for charity reclaims from HMRC, including Gift Aid claims. From 01 October 2013, all reclaims must be made through one of three ways:

  1. Using an online form: A list of donors and Gift Aid claims can be uploaded on an online form using a model spreadsheet. This allows up to 1,000 donors at a time.
  2. Using a compliant donor management database, which would allow the charity to claim for up to 500,000 donors at a time. Later in October, Comic Relief offered other charities free use of its Gift Aid software, which was developed to work with the new HMRC system. The software can be accessed here. Please note that at the time of writing, this free software could not be used for claiming on the Gift Aid Small Donations Scheme and it did not support payload encryption.
  3. Using a new paper form ChR1, which can be requested from the HMRC Charities Helpline

The Charity Finance Group published a useful guide on the new system, which can be accessed here.

Further guidance can be obtained from HMRC here.

The Annual Return

Many charities will have noticed changes in the Annual Return in 2013. Additional information was now required such e.g. whether the charity was registered for gift aid, and some previously optional information was now mandatory.

In 2014, it is expected that the Charity Commission will scrap the summary information return and will also display information about payments to Trustees on the online register.

Real Time Information reporting to HM Revenue and Customs (PAYE)

From 6 April 2013, employers were required to report PAYE information to HMRC in real time, meaning that the employer (or their accountant, bookkeeper or payroll bureau) has to:

  • send details to HMRC every time they pay an employee, at the time they pay them, and
  • use payroll software to send this information electronically as part of their routine payroll process.

There are relaxations for “small businesses” allowing them to report once a month (even if they pay their employees more frequently) until April 2014, when they will be required to comply in full.

Click here for more details and guidance on RTI from the HMRC website.

Pensions auto-enrolment

Employers have new legal duties to automatically enrol certain members of staff into a pension scheme and make contributions towards it. This is in order to encourage workers to save for their retirement. It is a staged requirement, which started back in 2012 for the largest employers first. Each employer has an allocated date to on which they must enroll their eligible staff. This is called a ‘staging date’.

Click here to find your staging date. Please note that you will need your organisation’s PAYE reference.

Jobholders can choose to ‘opt-out’, but this can only be done after they have been enrolled in the first place. An organisation cannot choose to not enrol eligible employees on the basis that they have opted out.

There’s a detailed Q&A on auto-enrolment here. Further guidance and information for employers, trustees, and individuals, and on getting ready for auto-enrollment is also available on the Pensions Regulator’s website.

Public benefit

On 16 September 2013, the Charity Commission published revised public benefit guidance for all charities. The new guidance helps explain and clarify the public benefit requirement for charities, having regard to the public benefit requirement when running a charity, and reporting on public benefit.

The new public benefit guides are available on the Charity Commission’s website here.

Charity SORP

On 9 July 2013, a consultation was launched by the regulators on a new Statement of Recommended Practice, which provides a comprehensive framework for charity accounting and reporting. The process closed on 04 November 2013, with over 1,600 voluntary sector representatives having taken part in the 26 consultation events.

The new SORP is due to be published in 2014 and is expected to come into force in line with FRS 102 for accounting periods starting on or after 01 January 2015.

NfP Accountants will be sure to bring you the key changes for small charities once the new SORP has been published.

Looking to 2014

There are already some great insights into what new regulatory changes we can expect in 2014. Some of these are included above, and there are some highlighted in the Autumn Statement (there’s a summary of key points for small charities here).

Please note that the information above is only intended to help small charities keep up to date with key regulatory changes, and specific advice should be obtained before taking action, or refraining from taking action, on any of the subjects covered above.