For instance, tax services, internal systems advice and trustee training are all high on the agenda and introducing new services has a universal appeal.

 

Charity tax
Many charity clients think charities are exempt from tax, but they’re wrong. Any accountants dealing with charities should be up to speed on the needs of the sector and the opportunities available to them.

 

Being a charitable organisation brings positive tax aspects. Charities should be using Gift Aid recovery to its full potential, but many don’t, according to Sarah Hollis, owner of Hollis Accounting Limited, which specialises in offering accountancy services to charities in Scotland.

 

Many don't. Donations are often received without appropriate paperwork completion. Small charities should implement systems where income is appropriately identified for gift aid claims. Advisors should ensure they are making the most of the claims available. This is key for the years 2008-2009, 2009-2010 and 2010-2011 where the transitional rules apply to gift aid claims, after which many charities will see their claims falling without taking positive steps to maximise their claims.

Trading and employment issues
As employers, charities are subject to the same regulatory and tax issues as any other employer. Due vigilance is essential for payments made to individuals who are deemed to be employees while ensuring all payroll is correctly recorded. Again, the finance team can help charities by suggesting schemes through which they and their employees might benefit (for example childcare vouchers schemes).

Again, many aren’t up to speed on VAT. They must be registered and taking advantage of reclaim positions can make VAT registration beneficial. VAT regulations for charities are extremely complex and often require specialist advice but by discussing potential projects and big decisions with financial advisors, they can be made fully aware quickly of the relevant issues.

Trading issues
Charities can be subject to tax on any activities that could be regarded as trading but many larger charities operate trading subsidiaries could gift aid up the profits, effectively removing the tax charge. Many smaller charities unwittingly run over the thresholds so it is worth reviewing all activities.

 

Also, as charity trustees often delegate day-to-day running of the charity to its employees, rigid internal systems are a must. These systems should be reviewed rigorously and improved wherever possible.

 

Internal audit
The term 'internal audit' often indicates a large organisation but in truth it can also be easily adapted for smaller charities. As trustees must consider all risks, the internal audit procedures and the resulting reports can provide material for a risk-review. As financial advisors have access to a number of different client systems, they are also suited to advise on what might work better.

Trustees and risk assessments
In an ever-more-regulated sector, trustees have statutory duties in relation to their governance role and often seek advice on how best to meet these requirements. Charity trustees are required to consider what risks the charity is exposed to and the best ways to mitigate these. Some accountants now run 'risk review' sessions, leading the trustees in discussions about discovering and assessing the risks.

 

Strategic outlook
Trustees, particularly in small charities, often do not have the full skills mix on the board. Some finance folk are getting involved in coaching trustees to think about the future of the charity and development. It’s worthwhile looking more closely at charities to see where they add value.

 

Stringent regulation in the charity sector calls for very specialist knowledge and experience, but those involved in the sector have the potential to make a real difference and acquire new skillsets outside corporate blue-chip environments.