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NEWSLETTER

February 2019 Edition

Welcome to the Februaryedition of our NfP eNewsWelcome to the latest edition of NfP eNews from MHA MacIntyre Hudson.

This month we have highlighted some important regulatory matters in relation to the extension to proposed legislations surrounding Making Tax Digital, legislation surrounding self-employed individuals and IR35, data protection and fundraising regulations.

Advice relating to digital and ethical practices has been made available, with the aim of highlighting the future direction which charities should take.

Chris HarrisAdvisory Partner E: chris.harris@mhllp.co.ukT: +44 (0)207 429 4100

Government extends ‘soft-landing period’ for compliance with Making Tax DigitalHMRC have extended the “soft-landing period” for charitable trusts, VAT groups and those with special schemes to comply with the government’s Making Tax Digital scheme for VAT returns.

The period was initially expected until April 2019 but has now been extended until October 2020.

The Making Tax Digital scheme means that VAT returns cannot be submitted through the government gateway. Businesses will be required to use Making Tax Digital compatible software which prepares a VAT return and sends it to HMRC. To be making tax digital-compatible, the software must integrate with HMRC systems to send VAT returns to HMRC. The “soft landing period” means organisations will only need to fill in nine boxes of information into a spreadsheet which is then linked to HMRC using bridging software. In the future, organisations will need to have transfers of data between software programmes carried out using digital software.

The Making Tax Digital Scheme applies to all VAT registered businesses, so those charities with high levels of exempt income and low taxable income need not worry.

All other organisations that are not a charitable trust, have a VAT scheme or not a member of a VAT group will still have to comply by April 2019, with their soft-landing period running until April 2020.

MacIntyre Hudson can help you implement, upgrade your software or ensure your current software is Making Tax Digital compatible. If your software is not compatible, we can act as an agent in these circumstances and can submit VAT returns on your behalf.

For further information or if you would like to discuss this matter further please contact your MH contact or Androulla Soteri.

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Using Conflict as a Catalyst for ChangeConflict affect all charities, large or small, simple or complex.

Trustees have a legal duty to act in their charity’s best interests. They are expected to recognise what conflict is, how it affects their organisation and to deal with any issue appropriately. Therefore, it is fundamental that charities follow the guidance issued by the Charity Commission.

This document recognises that conflict takes many forms over and above the guidance issued by the Charity Commission and other Charity Regulators. It seeks to cover the various types of conflict that you could come across and recognises that some conflict can actually be a positive for the charity.

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This month’s featured article: Conflicting roles

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Extension to intermediaries legislation (IR35) The October 2018 budget introduced an extension to the Intermediaries legislation, which is usually referred to as IR35, and will come into force from April 2020 for medium and large entities.

HMRC are increasingly concerned about ensuring workers are on the payroll, and that PAYE is operated properly, and the proposed changes in legislation show their commitment to improving these practices.

The Charity Tax Group said this delay will help charities “who need time adapting to these new requirements”. The legislation is currently in place for the public sector, which includes government departments, schools and universities, local authorities and the NHS.

To review indicators of employment, HMRC have a useful employment status checker on their website.

For more information regarding the above or if you would like to discuss any matters regarding employment tax , please contact one of our specialists, Gordon Thrower.

Charity digital code of practiceThe UK’s first digital code of practice for charities was launched to provide guidance on improving practices surrounding digital capabilities.

The code has been developed by a wide group of charities and organisations within the sector. The code of practice aims to help charities by giving practical advice on incorporating digital technology into their work and activities, particularly fundraising and engaging with stakeholders.

The steering group has identified 7 principles which shape areas of focus for the code and the considerations which a charity must take. Two versions of the code have been produced, one for larger charities and one for smaller charities who have less capacity to improve their digital functions.

The Charity Commission’s Director of Policy, Planning and Communications, Sarah Atkinson, welcomed the code’s launch and stated, “As a regulator, we want to ensure charities have the information and tools they need to succeed and that’s why we are pleased to continue supporting the development of the Code”.

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Ethical code issued by NCVOIn January 2019, the NCVO, in consultation with much of the sector, has issued an ethical code for charitable organisations.

The code sets out four essential principles which ultimately aim to help support charities, their governing bodies, employees and volunteers in recognising and resolving ethical issues.

Charities are encouraged to view the principles as a benchmark of good practice and to try to incorporate them into day to day operations and decision making.

The Charity Commission has welcomed the code and would like to see close alignment between the Ethical Code and Charity Governance code and “in time, the Charity Governance code could be developed to encompass the key elements of the code of ethics”.

Information Commissioners Office publish their findings of information risk reviewsIt is 8 months since the implementation of the GDPR and organisations should now be looking at how effective the implementation and procedures in place have been.

The Information Commissioner’s Office (ICO) have published their findings of 8 charities’ information risk reviews, intending to help them and others in the sector identify areas of improvements with the protection of data.

Specific areas of improvement were; documenting internal governance arrangements in governance frameworks and policies, monitoring and reporting in terms on data protection compliance checks, training for staff and volunteers and business continuity planning.

Macintyre Hudson can assist with drafting policies and procedures, governance frameworks and help with maintenance and audit of your GDPR systems. Please contact Chris Harris.

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The fundraising regulator is to name organisations under investigation The fundraising regulator is to name organisations in all investigations and complaints received from 1 March 2019.

The new policy is designed to ensure a fully transparent process and to make it clear whether complaints have been upheld or not.

Organisations may be concerned about the impact on their reputation as a result of being named by the Fundraising Regulator, before any conclusion of investigation has been confirmed.

Auditor “whistleblowing” under scrutinyIn past editions of NfP eNews we have highlighted revised guidance issued by the Charity Commission, concerning the “whistleblowing” responsibilities of auditors and independent examiners. In February 2018 following an analysis of financial statements received by the Commission that had modified audit opinions, the failure to report by auditors in over 75% of cases was highlighted.

The Commission has followed up on previous research on auditors’ compliance, noting that in most cases of noncompliance, the auditors had apologised for the oversight and provided the required report. The Commission also stated that 12 auditors did not respond.

In the future, the Commission will refer non-compliant auditors and independent examiners to their professional body without prior notification.

Whilst not included within the above, we are aware that we as auditors are key to ensure accountability and transparency in the sector. If you have any concerns about these issues, do get in touch with your usual contact in the firm or otherwise, Sudhir Singh, Head of Not for Profit.

MHA MacIntyre Hudson trading as MacIntyre Hudson LLP is a member of MHA, an independent member of Baker Tilly International Ltd., the members of which are separate and independent legal entities.

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