This article was last updated on 5 November at 13:45.
This is haysmacintyre’s dedicated page for charity and not for profit organisations on the range of financial, tax and accounting measures being introduced to combat COVID-19 together with our related thoughts and insights on helping organisations with their cash-flow and compliance requirements.
haysmacintyre’s award winning Charities team is one of the largest in the country, and this experience has helped us to develop a thorough and in-depth knowledge of the business issues, risks and challenges charities face and how we can best support you during this unprecedented time. This page will cover matters relating to employees, funding, taxes and HMRC, reporting and governance, as well as additional topics to help you address any concerns you may have.
Please visit this page regularly as new content will be produced that considers the latest updates and new initiatives.
As we are acutely aware that this is a challenging we are running a series of virtual events to provide much needed support and guidance to our clients and contacts. The virtual events are tailored to different sectors and cover a variety of topics ranging from the Government’s schemes and grants to furloughing staff and financial reporting. To view our upcoming virtual events, please click here.
If you wish to discuss any of the COVID-19 related initiatives or changes please contact your usual haysmacintyre contact or email CV19@haysmacintyre.com.
Matters relating to: EMPLOYEES
Coronavirus Job Retention Scheme (CJRS) and Job Support Scheme (JSS)
The Government introduced the Coronavirus Job Retention Scheme (CJRS) to provide financial support to allow businesses and organisations to continue to pay salaries to those employees that would have otherwise been laid off or made redundant as a result of COVID-19. Following the announcement of a second lockdown in England for the period 5 November to 2 December, the CJRS did not close on 31 October 2020, as previously planned. It will instead continue until March 2021. More information on the latest update of the CJRS can be found here.
The introduction of the Job Support Scheme has therefore been delayed.
Extension to the Statutory Sick Pay (SSP) regime
Temporary changes are being made to SSP regulations as part of the Government’s response to helping organisations during this period of disruption. Further details are here. HMRC’s online SSP calculator is available for employers to work out statutory sick pay for employees. See here.
HMRC have updated their guidance for employers in assessing an employee’s fitness to work for SSP purposes. The guidance now states “if your employee has been self-isolating for more than 7 days because of COVID-19, they can obtain an isolation note from NHS 111 as proof of this if you require it”.
The ICAEW has released useful guidance on the COVID-19 measures introduced for SSP and how employers can recover SSP. The guidance is here.
Matters relating to: FUNDING
Business interruption loans
For smaller businesses: Bounce Back Loans (BBL) is a new small business fast-track finance scheme with a 100% government guarantee. Qualifying businesses can borrow between £2,000 and £50,000 (and no more than 25% of turnover). The loans will be repayment and interest free for the first 12 months. Applications are intended to be short and simple via an online form with the cash to be received in days. To facilitate the quick application process there should be no forward-looking tests of business viability and no complex eligibility criteria. The announcement is here. The scheme is scheduled to be launched at 09:00 on 4 May. The Government is currently working with lenders to ensure BBLs are advanced quickly, as well as agreeing a low standardised interest rate for the remaining period. The BBL will run alongside the other COVID-19 loan schemes. We expect further announcements during this week, especially regarding the criteria on eligibility. At present there is no definition of small business and it is not known whether any sectors do not qualify.
For SMEs: the British Business Bank (BBB) together with 40+ lending providers are providing a range of financial options enabling a business (turnover of less than £45m) to borrow up to £5m, with the first 12 months being interest-free and the loan being 80% backed by a government guarantee. The scheme is “live” and the BBB strongly recommends that the business’s current lender (assuming they are also a provider) is approached online. Current providers are here. Further details are here. The BBB has also issued a useful FAQs webpage – see here. As per the FAQs we note that the BBB has confirmed employer, professional, religious or political membership organisations or trade unions are in principle eligible but that organisation that are classified as a public-sector organisation by the Office of National Statistics, it is not eligible for CBILS.
For larger businesses: on 2 April the CLBILS was announced, which is a scheme for larger businesses. All firms with a turnover exceeding £45 million will be able to apply for up to £25 million of finance, increasing to £50 million of finance for firms with a turnover of more than £250 million. Further details are on the BBB website here. The Government’s latest announcement is here.
£750m Funding boost
As announced on 8 April the Chancellor is providing a £750m funding boost for the charity sector, but mainly reserved for those charities that are on the front line of fighting the coronavirus, and those that provide critical services and support to vulnerable people and communities. Our analysis of the announcements is here. The government’s announcement is here.
Matters relating to: TAXES AND HMRC
No business is required to pay VAT from 20 March 2020 to 30 June 2020. While this is an automatic offer with no applications required we recommend businesses cancel their direct debits to avoid HMRC “accidentally” taking VAT payments during this period.
This announcement and other VAT aspects relating to COVID-19 including bad debt relief and other VAT measures and considerations are here.
Deferring payment of taxes
HMRC has set up a dedicated COVID-19 helpline (0800 024 1222) to help those in need to discuss and agree a bespoke TTP arrangement. It is understood that HMRC’s approach is an open willingness to allow businesses to defer tax payments. What is key is communicating with HMRC prior to the tax due date and that the business remains compliant with all its tax filing deadlines. Early action on this is highly recommended. Current experience is that HMRC are taking a light touch on the information they require before agreeing to a payment plan. Further details are here.
We understand that the HMRC Coronavirus helpline can currently provide a PAYE deferral to June 2020, but they are not currently providing TTP arrangements.
That said, once the PAYE end of tax year filings have been processed by HMRC (after 5 April 2020), should you require a payment plan you can contact the Payment Support Service (0300 200 3835) Monday to Friday between 08:00 and 16:00.
HMRC guidance and advice is ever evolving, but the key message is if you are unable to settle a tax liability on time, contact HMRC before the liability becomes due for payment. Falling to do so will result in penalties in addition to interest payments.
Trading subsidiaries and potential Gift Aid shortfalls
Many charity trading subsidiaries are likely to see a sudden drop of income and the potential corporation tax implications should not be ignored especially the effect on being able to make sufficient Gift Aid payments to the charity parent. We set out our initial thoughts here as to how these might be mitigated.
Have you received your business rates grant? The Government has published data stating that as of 20 April nearly 50% of COVID-19 related business support has been paid out by Local Authorities (relating to 491,725 business properties). The announcement is here.
For further details on the changes to business rates, please see here.
In April’s edition of HMRC’s Stamp Taxes newsletter, HMRC have explained how to get the share register updated without a physically stamped document. HMRC have adopted temporary measures for dealing with Stamp Duty which will allow share registers to be updated by a registrar without a physically stamped document. No post should be sent to the Birmingham Stamp Office. Instead, an electronic copy of relevant forms and related documents should be emailed to firstname.lastname@example.org. Once the notification and payment (if applicable) of Stamp Duty has been checked, HMRC will email a letter. HMRC’s letter should then be presented to the relevant registrar (or Companies House) together with the instrument of transfer which now permits them to update the share register. HMRC also advises that where an instrument of transfer has previously been posted to the Stamp Office that document should be resubmitted by email using the new process as the instrument of transfer will not be dealt with until the coronavirus measures end.
HMRC have announced temporary measures to deal with the stamping of Stock Transfer Forms (see here) and the payment of Stamp Duty during the crisis. See here.
The proposed changes have been deferred until April 2021. Further details are here
We are also considering other ways to help organisations generate cash. One possibility is shortening current accounting periods to accelerate claims for creative tax reliefs (such a Theatre Tax Relief) as well as accelerating the completion of financial statements so such reliefs can be submitted as soon as possible. This action should be considered over the coming months.
Matters relating to: REPORTING AND GOVERNANCE
Accounting for government COVID-19 support measures
In these unprecedented times, accounting for government grants or governmental assistance by other means has come sharply into focus as the Government has been making unprecedented levels of assistance available. Further details about the support measures available are here.
Audit and financial reporting
As COVID-19 continues to spread with deepening effects on the economy and restrictions to daily life, entities with 2019 and early 2020 year ends must consider the effects on their activities and how these are reflected in their financial statements. The impacts must also be considered for the practicalities of the reporting and auditing process and planned for accordingly. Our initial thoughts on these effects and implications can be found here.
COVID-19 financial reporting questions for charities
COVID-19 will have a significant impact on the drafting of Trustees’ Annual Reports and other disclosures within the financial statements. Here we look at some of the key considerations for trustees and management, from additional requirements within the Trustees’ Report to post balance sheet events and going concern.
The ICAEW is monitoring the situation closely and collating resources as conditions unfold, which is available on their coronavirus hub. They have issued guidance on what COVID-19 means for going concern matters, additional disclosure and audit reports.
The FRC have also issued their own guidance. Read more here.
In these unprecedented times there are many challenges that organisations, particularly charities, face. With most charities having either December or March year ends, the onset of another audit cycle adds to those pressures. Upcoming audits in particular will be heavily impacted by COVID-19 as firms will have to move online for the onsite work and in person meetings that typically encompass major aspects of the audit service. haysmacintyre have invested over the years in having an exemplary IT framework and so we are able to assist clients fulfil their statutory audit duties by deploying our contingency plans and offering remote auditing. There are, however, a number of critical requirements that charity clients can do to assist in the process and work together to ensure that we operate as smoothly as we possibly can. Find out more here.
COVID-19: Challenges and considerations in charity financial management
COVID-19 has quickly presented a number of unprecedented obstacles to charity organisations and the responses to these new challenges have varied as widely as charity sectors themselves. There are a number of financial management and reporting tools that may lend themselves to further consideration in these times and may help in the short term to bridge the gap and provide more available finance, or at least identify potential funding options. In this article we cover endowment funds, loan finance, fundraising and investments for charitable organisations. Find out more here.
Reporting obligations and governance
Fulfilling reporting obligations and making effective decisions
Charities will be facing the challenges of office closures, cancellation of fundraising events and reduced scope for travel by management and trustees. Here we look at how trustees can continue to make decisions virtually and the flexibility in deadlines for filing annual reports and accounts.
Coronavirus and governance: what charity trustees need to think about
NCVO has published some useful guidance for trustees during this pandemic with some key questions to consider and some practical guidance on how to hold remote board meetings. This guidance, which they’ve kindly allowed us to share, can be found here.
The Government is to introduce legislation to ensure AGMs required by law can be carried out safely, consistent with the restrictions in place to address the spread of COVID-19. Companies will temporarily be extended greater flexibilities, including holding AGMs online or postponing the meetings. Further details are yet to be released. COVID-19 also sees companies develop AGM contingency plans. Further details here.
It is a priority for all organisations to reduce immediate and long-term impact. COVID-19 is now on everyone’s risk mitigation strategies. Some emerging risks are difficult to foresee and the impact on organisations cannot be judged. Further details for key actions that require consideration in the current climate are here.
Sports organisations and governance – a pre-recorded webinar
haysmacintyre and Northridge Law are pleased to share a pre-recorded webinar on how sports organisations can navigate year-end governance and finance during the COVID-19 pandemic. This webinar covers a range of legal and financial topics ranging from governance and risk during the pandemic to year end logistics and reporting challenges. To view the webinar, click here.
Companies House filing deadlines
From 25 March corporates will be able to apply for a three month extension to filing their accounts. Further details here.
Gender pay gap deadlines
This year’s reporting (2019/2020) has now been suspended and there will be no expectation on employers to report their date. Further information is here.
Community Interest Companies
Guidance has been issued in respect to CICs. The guidance is here and refers to the robust COVID-19 plans in place by the Office of the Regulator of CICs to maintain services as well as summarising the position if a CIC is unable to deliver Community Benefit and the government support available to CICs. Although there are no specific measures introduced for CICs.
Fraud and cybercrime
The Government has published an alert providing information and advice for charities about COVID-19 related fraud and cybercrime. The announcement is here. The Government has recently added (12 May) information about a COVID-19 fraud webinar for charities, as well as new links added to the ‘Scam emails (‘phishing’)’ and ‘Protect your devices’ sections.
It has been widely reported that cases of fraud or fraudulent attempts have substantially increased during the crisis. Fraudsters are taking advantage of this emergency and change of working environment measures to defraud organisations. We set out here our fraud awareness and preventative measures that organisations need to consider during these uncertain times.
Secured finance under the Charities Act
Independent schools are now facing the prospect of being closed for a prolonged period of time. Due to this, they are revisiting the potential implications on their finances and whether they have sufficient funds available in these uncertain times. However, in most cases, any finance will be secured on the assets of the school. Further details are here.
Modelling considerations for independent schools because of COVID-19
There has been a huge amount of work done across the independent schools sector over the last few weeks to move towards an online method of provision. This transition will help shore up a certain level of income, but with summer term bills imminent, there are still significant unknowns as to what the actual impact on school’s income may be, meaning financial modelling is more important than ever. For more information, click here.
The Government has published (7 April) updated COVID-19 guidance to the charity sector. Please see here.
COVID-19 is a global crisis, and organisations need to access local knowledge from around the world to manage their operations. haysmacintyre is the south UK member of MSI Global Alliance, an association of independent but like-minded legal and accounting firms with over 260 member firms in more than 100 countries. MSI has established a dedicated COVID-19 webpage to share the articles of our fellow member firms, committed to helping international organisations navigate these uncertain times. The website is here. If you are interested in the COVID-19 measures introduced by a particular country and cannot find any details on the MSI dedicated page please email CV19@haysmacintyre.com.
haysmacintyre has sponsored a benchmarking report conducted by memcom on the impact of COVID-19 for membership organisations. The report covers organisational response to COVID-19, readiness, and resilience for the future. To access the report, click here.
Culture at your fingertips…
Arts organisations, museums and theatres across the UK are unveiling innovative digital plans to ensure culture and creativity remains accessible for all. See here for details.