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Ask the Doctor - Frequently Asked Questions  When do charities have to start reporting on public benefit? Under the Charities Act 2006 charities have to start reporting on their public benefit from 31-3-2009. As a result the public benefit reporting requirement begins for charities with financial years starting on or after 1st April 2008. That will mean that you will all have to start collating evidence now as to how that public benefit for your charity is met. Can we choose whether or not to register as a charity? The simple answer is no – you can’t. The law states that any organisation with charitable purposes, established for public benefit and having an income in any given year of £5,000 from any source must by law apply to be registered as a charity. If you are unsure as to whether or not this legal requirement applies to your organisation then you should contact us as soon as possible as we can help identify whether or not you do need to register and also complete the application forms for you. What is the role of trustees? The term ‘trustee’ in a voluntary group context applies to any person who sits on a committee, board of directors etc and oversees the day to day management of that organisation. Trustees are bound by the Trustee Act 2000 and other legislation (depending on the way in which they are established eg: Company law if the group is a company etc).Trustees have both duties and powers to fulfil and utilise. Duties are mandatory whereas the powers are discretionary. If you, as a trustee, fail in your statutory duties then you can be held personally responsible and, in serious cases, ultimately liable. It is therefore very important that you make sure you know what you are taking on when you become a trustee and also seek appropriate training if unsure in any way, shape or form. Community Futures offers bespoke trustee training if required. For further information contact us at the usual address. Do we need to have a professional audit on our organisation’s accounts? The answer to this will depend on (1) whether you are a charity; and/or (2) a company limited by guarantee; and/or (3) there is some provision within your governing document requiring a full professional audit and/or (4) you have been funded and the grant conditions require a full audit to be done. However, generally speaking The Charities Act 2006, together with the Companies Act 2006, have made several important changes to the audit, accounting and reporting framework for charities. The audit thresholds for both company and non-company charities have already been increased for financial years starting on or after 27 February 2007. The Charities Act 2006 simplifies the rules about when a professional audit is required, and reduces the differences in the thresholds for company and non-company charities. (A non-company charity is a trust or association which has not been incorporated under the Companies Acts. A company charity is a charity which is incorporated under the Companies Acts and is registered with Companies House). Non-company charities where the gross income does not exceed £10,000 in the relevant financial year
There is no requirement to have the accounts independently examined or audited, unless the charity’s governing document stipulates it, but we do have the power to require an audit in exceptional circumstances. Non-company charities with a gross income of over £10,000 but not exceeding £100,000 in the relevant financial year Accounts must be subject to outside scrutiny but trustees may choose either independent examination or audit by a registered auditor, unless the charity’s governing document stipulates one or the other. In exceptional circumstances, we have the power to require an audit. Non-company charities with a gross income of over £100,000 but not exceeding £500,000 in the relevant financial year, and total assets not exceeding £2.8m Accounts must be subject to outside scrutiny but trustees may choose either independent examination or audit by a registered auditor, unless the charity’s governing document stipulates one or the other. If an independent examination is chosen and gross income exceeds £250,000 then the independent examiner appointed must be a member of a body specified under the 2006 Act. In exceptional circumstances, we have the power to require an audit. Non-company charities with a gross income exceeding £500,000 in the relevant financial year, or whose gross assets exceed £2.8m and gross income exceeds £100,000 A statutory audit is required and the accounts must be audited by a registered auditor. Charitable companies are required to have their accounts audited by a registered auditor if either of the following conditions apply:
• gross income exceeds £500,000; or
• gross assets exceed £2.8m. However, if the gross assets are not more than £2.8m and the gross income is over £90,000 and does not exceed £500,000 then an accountant’s report (or audit exemption report) may normally be prepared instead of a full audit report. If the gross assets are not more than £2.8m and gross income is £90,000 or less, no external scrutiny is required. What are the main advantages of being a charity? The main advantages are that charities: · can claim relief from tax on most income or gains and on profits from some activities. Charities can also claim tax repayments on income received on which tax has already been paid including Gift Aid donations from individuals. · will be able to claim relief from VAT on some of the goods and services they buy, regardless of whether the charity is registered for VAT and charities that are VAT registered may be able to reclaim some of the VAT they are charged from HMRC. · are often able to raise funds from the public, grant-making trusts and local government more easily than non-charitable bodies; can seek advice from the Charity Commission Who can see the minutes of trustee meetings? The minutes of trustees' meetings must be made available to all of the charity's trustees and, where necessary, to appropriate professional advisers, such as auditors. Minutes of trustees' meetings are not open documents and do not have to be made available for public inspection, unless the charity's governing document requires this. However, the minutes of a general meeting are usually made available to members (in the case of a charitable company they have to be) but, again, they do not have to be made available for public inspection unless the charity's governing document requires this. Can anyone be appointed as a trustee? In short the answer is no. There are strict legal restrictions on who may be a charity trustee and further restrictions may also be contained in the charity's governing document. Before appointing a new trustee, the trustee board must make sure that the appointment meets the requirements of the charity’s governing document and the law. When preparing to appoint a new trustee, the trustee board must ensure that the person is qualified to act as a trustee. Many charities ask prospective trustees ask new trustees to sign a declaration to confirm that they are not disqualified from acting as a charity trustee.No-one under the age of 18 can be a trustee of a charitable trust or unincorporated association. However, a person under 18 can at present be a director, and so a trustee, of a charitable company. However, from October 2007 new provisions in the Companies Act 2006 introduce a minimum age requirement of 16 for individuals to serve as company directors.Some people are disqualified by law from acting as charity trustees or nominees, including: · anyone who has been convicted of an offence involving deception or dishonesty, unless the conviction is spent · anyone who is an undischarged bankrupt anyone who has made a composition or arrangement with, or granted a trust deed for, his or her creditors and has not been discharged in respect of it · anyone who has previously been removed from trusteeship by the Courts or the Charity Commission for misconduct or mismanagement; and · anyone who is under a disqualification order under the Company Directors Disqualification Act 1986. In addition to the disqualifications detailed above, the Criminal Justice and Court Services Act 2000 disqualifies certain individuals from holding a range of positions in children's charities, including charity trusteeship. |
