Charity accounts - know your obligations

25 April 2016 • HMRC News

Recent research conducted by the Charity Commission into the quality of annual reports completed by smaller charities concluded that many smaller charities were not aware of their reporting obligations.

This observation and the commission’s recent research outlined on Gov.uk comes as no surprise to Warrener Stewart’s Gary Chapman, the Fulham based Chartered Accountants includes several charities as clients; “We work with a number of charities completing both audits and independent examinations, together with assisting with financial reporting. For the charity sector it is imperative to maintain clear and transparent financial records. We would be happy to hear from any charities who would like our assistance with their financial reporting obligations.”

The Charity Commission’s research revealed the following findings:

Small charities not up to scratch

The research showed that just under half of the annual report and accounts that were provided to the commission by small charities met a minimum, basic standard. Many small charities do not appear to be aware of their reporting obligations - 1 in 5 sent some other form of report, 1 in 6 did not send the commission any form of report at all, and several small charities only sent their annual report and accounts after the commission had provided further explanation of the requirements to them.

However those charities that use both the commission’s annual report and accounts templates showed a significant improvement on the others, with 71% producing reports and accounts of acceptable quality.

Larger charities are improving

The larger charities report shows their accounts are improving. It tells a more positive story, with over three quarters of charities producing sets of accounts that met a minimum basic standard in 2013-14, up from just over half in 2011-12. Looking at the 3 documents that make up a set of accounts:

90% of annual reports covered either the charity’s purposes and its activities to carry them out or its reserves policy: most included both

90% of independent scrutiny reports were of the correct type, either audit or independent examination, for the charity’s size

93% of accounts met a basic integrity standard and all of the charities that were required to prepare accruals accounts had done so

But some larger charities continue to produce accounts with major flaws

Charities continue to file sets of accounts with the commission with major flaws, such as a chairperson’s statement instead of an annual report, an accountant’s report instead of an independent examiner’s report, or accounts that don’t balance. They also file annual reports that look well-presented but are not transparent about what the charity does, or about how the trustees are dealing with financial risks shown in the accounts.

More charities are talking about the public benefit that their activities provide - but not nearly enough

The public benefit report showed that whilst the number of charities meeting the public benefit requirement has improved, just over 40% of charities in their 2013/14 annual reports compared to just over a quarter in 2011/12, the numbers still need to improve significantly. Meeting this requirement is more than just discussing a charity’s activities. It also requires an assessment of how a charity’s activities have led to benefit for its beneficiaries and a statement that the trustees have had regard to our guidance on public benefit.

Spring Budget 2016 Highlights

16 March 2016 • HMRC News

Today’s Budget Statement introduced a broad range of new measures and changes to the tax landscape.  The headline announcements - and a reminder of the measures coming in from April 2016, April 2017 and beyond - are highlighted below.

Measures introduced from April 2016

Property taxation

From 1 April 2016, the purchase of buy-to-let residential property will attract a 3% surcharge over and above the usual rates of SDLT on purchases of second homes (“additional residential properties”).
In addition, the 10% “wear & tear” allowance is also to be abolished from 6 April.
For commercial property, a new SDLT rate system is to be introduced from midnight tonight.  The first £150,000 will be at 0%; the next £100,000 at 2% and above £250,000 will be 5%.

Tax on Dividends

The major change to the taxation of dividends announced last year will come into effect from 6 April 2016.  The rates of tax applicable to dividend income will increase by 7.5% at all income levels, although this is mitigated to a certain extent by a new £5,000 tax-free allowance for dividends.

Reduction in Capital Gains Tax rates

From 6 April 2016, the rates of Capital Gains Tax will reduce from 18% to 10% for basic rate taxpayers, and from 28% to 20% for higher rate taxpayers.  It is important to highlight, however, that the old rates of 18% & 28% respectively will continue to apply to gains on residential property.  

Loans to participators

The tax payable by close companies on new loans or advances (made on or after 6 April 2016) will increase from 25% to 32.5%, in line will the new tax rate on dividends for higher rate taxpayers.

Pension Allowance

As previously announced the annual pension allowance is to remain at £40,000, however, for those earning more than £150,000 per annum, the pension allowance will be tapered down to a maximum of £10,000 for those earning £210,000 or more.

Entrepreneurs Relief for Investors

Entrepreneurs’ Relief is to be extended for long term investors who subscribe for new shares (after 17 March 2016) in unlisted trading companies and hold these for three years.  There is to be a separate lifetime allowance of £10M available.

Employee Share Schemes

A restriction has been introduced to the CGT exemption on the disposal of ESS shares, acquired after midnight tonight, to a lifetime exempt amount of £100,000.

Proposed measures from April 2017

Property taxation

A restriction on the tax-deductibility of mortgage interest payments for private landlords will be introduced from April 2017 and is to be phased in over four tax years up to 2020/21.

Savings

A new Lifetime ISA is to be introduced for adults under 40 at 6 April 2017.  Individuals will be able to save up to £4,000 per annum and receive a 25% bonus from the Government up to the age of 50.

Corporation Tax 

The corporation tax rate is set to fall to 19% from April 2017 onwards.

In addition, new measures will come into effect from April 2017 onwards applicable to large corporations (i.e. those with profits in excess of £5M per year), restricting the deductibility of losses from earlier years and also the deductibility of interest costs that are allowable. 

Measures for the future

Property taxation

From April 2019, where capital gains tax is due on the disposal of a residential property, payment of the tax will be due within 30 days of completion. This is a significant change from the current Self-Assessment system, under which individuals have up to 22 months until CGT is payable, depending on the time of year of the disposal.

Employment

It is proposed that from April 2018, Employers National Insurance contributions will be payable on termination payments where the amount exceeds £30,000.

National Insurance

From 2018 Class 2 NIC for self-employed will be abolished.  There will be a consultation regarding Class 4 NIC, which are also paid by the self-employed, to consider how to build entitlement to the State Pension and other contributory benefits which used to be covered by the payment of Class 2 contributions.

Corporation Tax

The corporation tax rate is set to fall to 17% from April 2020.  It was previously announced that corporation tax would reduce to 18% from April 2020.

If you would like to explore what today’s Budget Statement could mean for you and your business, please call 020 7731 6163 to talk to one of our tax team. 

 

Taking a family stroll to new limits!

15 February 2016 • Warrener Stewart News

Whilst most families were enjoying the early spring sunshine this Valentine’s Day, two Warrener Stewart families were fighting it out on the Thames tow path, running the Craven Cottage 10k race. The race, now in its third year, follows the river from Craven Cottage (famous home of Fulham FC) up to Hammersmith Bridge and Barnes, then back via Putney Bridge.

Craven-Cottage-10k-Feb-2016.pngleft-right, Mike Collins & Jane Collins (David's Dad & Mum), Nick Morgan, Ricky Morgan & David Collins.

The race is run in support of the Fulham FC Foundation and all proceeds used to support their projects that use the power of sport and education to build better lives for people in the local community

Nick Morgan, Joint managing director of Fulham based chartered accountants, Warrener Stewart, was joined by his son Ricky. Team Morgan raced the ‘taxing team’ of Nick’s tax colleague, David Collins who’d enlisted his sprightly parents; Mike & Jane Collins.

“With a bitter wind blowing up the Thames, it made for a very cold start,” noted Nick. “However, once we got into it, things quickly warmed up. I am pleased to say that I drifted round just under the hour in 59mins 49s, finishing 118th – just cracked the hour, but no cigar!”

It was a very respectable showing all round with Nick’s son Ricky, finishing 8th in just 40 minutes; whilst David, just a quarter minute behind, came 9th.  

“I thoroughly enjoyed the event” commented Nick. “But I may need to pass the Vets baton to Mike, David's Dad, for future races since he ran an impressive 53 minutes, whilst his Mum Jane also completed the course in just over the hour.”

Warrener Stewart support local girls football team

08 February 2016 • Warrener Stewart News

The popularity of girls playing football has grown, with female football now the biggest female team sport in the UK.  Grass roots support is vital for the many teams who compete at local level.  One team who are about to have the opportunity of a life time is Teddington Athletic FC’s Girls U15, when they fly out to Tampa, Florida. 

Tampa_footie_team_800x530.jpgWhilst only recently formed in 2013, the girls’ team has gone from strength to strength with the help of many sponsors, including breast cancer charity CoppaFeel! In a bid to give something back to their sponsors the girls are busy raising money to fund their tour to Tampa where they will be hosted by Tampa Bay United, the area’s largest soccer club. Their aim is to give a percentage of the funds raised to the charity to raise awareness of breast cancer in young women.

To help them reach their goals, Warrener Stewart has kindly agreed to donate money to the girls once in a lifetime football tour. Commenting on the donation, joint managing director, Nick Morgan said; “One of our long standing clients, Martin Fairn, joint founder of key-staff performance improvement and management company, Gazing Performance, approached us to help his daughter’s team. We wanted to help them give as much to the charity as possible so were happy to support them; this is such a wonderful opportunity for them to see how sport can be a great way of developing better international links and fulfilling a lifelong ambition.”

Full marks for Warrener Stewart’s tax advisors in recent exams

28 January 2016 • Warrener Stewart News

In the latest round of the Association of Taxation Technicians (ATT) exams taken in November, Warrener Stewart had four candidates sit these professional tax exams; (l-r) Ryan O’Connor, Felicity Butler, Ashleigh Molton and Freddie Hollom.ATT-Students-(1).jpg

The ATT is the oldest examination board concerned solely with tax compliance, passing one of the stages of these exams demonstrates a professional standard and deep understanding of tax compliance issues in the UK.

“I’m pleased to announce that all our tax students passed their various stages,” commented Damian Talbot, head of the tax department at Warrener Stewart. “Felicity who took her first exam even achieved a distinction for coming in the top 10%; whilst Freddie, Ashleigh and Ryan successfully passed their outstanding stages leaving them just a final assessment to complete before qualifying.”

“In addition to these passes, we will soon have another Chartered Tax Advisor in the tax team following Daniela Tripksa hard work passing her final CTA exam. This allows her to apply for her Chartered Institute of Taxation (CTA) qualification,” continues Damian.

The taste of sweet success

06 January 2016 • Warrener Stewart News

Figures released from Companies House showed that 2014 was a record year for people taking the leap to start their own businesses, with 581,173 companies registered alone in 2014. As London based chartered accountants, Warrener Stewart can testify, enquires from start-up businesses has doubled in the past 18 months.

Many of their new clients are keen to start a new business based around some of the simplest of ideas. Indeed, inspired by an already successful pudding maker, one client saw an opportunity with their own take on chilled, potted deserts. Together with a handful of local associates and investors, Fulham based chef Julian Dyer, founded Pots & Co, turning to Warrener Stewart for their accountancy and financial advice to help develop the company’s foundations. Pots & Co has gone from little pots to large contracts in just under three years.

Having already secured distribution with Waitrose, Tesco and Selfridges, the Acton based pudding maker recently won a contract to supply their handmade puddings to British Airways and Delta Airlines. This latest contracts will help increase Pots & Co’s revenue from £2.7m to £8m.

“Pots & Co is a great success story,” notes joint managing director, Nick Morgan. “When we first started working with Julian and his team back in 2013 they had a handful of contracts, a few part time staff and were just embarking on their journey. It is fantastic to see how Julian and his colleagues have taken this company from an embryonic stage to a thriving business in such a short space of time. It is also gratifying to know that we have been able to assist directly by providing constructive assistance and advice in various areas, often needed in rapid response, as is often the way with such new ventures!”

 

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“Warrener Stewart understands our business; they give us more than any other Accountancy service we have ever received in the past. They are extremely commercially aware and very current when it comes to changes in tax policy. ”
Diana Hoare - Anderson Hoare