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Cash remains king even with COVID-19, so minimise current tax leakage

COVID-19 has presented charities and other NFP entities, particularly those in business, with a number of, currently unanswerable, questions: How long will the lockdown last? How will the lockdown be relaxed? Will my customers still be in business? Will my customers and tenants be able to pay? Will my supply chain still be intact? What will the economic environment look like? What will ‘normal’ look like afterwards? However, despite these unknowns, the old adage ‘cash is king’ has never been more important than now.

This pandemic will end, and when it ends you will need to be solvent to take advantage of the opportunities that will arise. For those that have cash constraints, cash leakage mitigation strategies should already have started, because once the cash has gone, it’s gone. However, it is not too late to start.

In this article we look at some of the ways to minimise cash leakage from tax and our recent experiences which can help your charity remain financially fit for the recovery.

Insights
Tax
7th April 2020
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COVID-19: Temporary changes to Statutory Sick Pay (SSP)

This article was last updated on 3 April at 14:59.

Insights
3rd April 2020
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COVID-19: Trading subsidiaries and corporate Gift Aid payments

This article was last updated on 3 April at 17:25.
Although the Government appears to be making some welcome concessions in respect of individual Gift Aid, corporate Gift Aid is less flexible due to the nine month payment deadline and the potential for ‘wasted charitable donations’, both of which are enshrined in tax law.

Charity trading subsidiaries where income has dropped off may therefore need to reflect, plan ahead and take early action in order to avoid:

  1. Unexpected corporation tax liabilities due to insufficient cash and/or distributable reserves to pay up previously generated profits
  2. Not being able to claim tax relief in respect of a previously made donation (a ‘wasted charitable donation’) due to insufficient profits
Insights
Tax
3rd April 2020
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COVID-19: Charity financial reporting questions

This article was last updated on 26 March at 10:32. Content of Trustees’ Annual Report COVID-19 will have a significant impact on the drafting of Trustees’ Annual Reports. Each charity will need to consider the impact of COVID-19 on its activities, financial position and future plans. The key areas of the Trustees’ Annual Report where we […]

Insights
Audit
26th March 2020
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COVID-19: Challenges and considerations in charity financial management

Events have happened very quickly and the response of charities to these new challenges have varied widely as their sectors have demanded different responses: arts and culture organisations that run theatres and other for-hire spaces have had to close; fundraising charities have had to reforecast and anticipate the loss of income from cancelled public events and fundraising opportunities; and independent schools have activated their business continuity plans and are providing remote learning for their students.

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.

Insights
Risk Assurance & Advisory Services
26th March 2020
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COVID-19: Fulfilling reporting obligations and making effective decisions for charities

Charities will be facing the challenges of office closures, cancellation of fundraising events and reduced scope for travel by management and trustees. Though there may be some positives from office closures and event cancellations, such as for example, travel costs being lowered and a reduction in the carbon footprint due to organisations being forced to […]

Insights
Risk Assurance & Advisory Services
20th March 2020
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Publications
20th March 2020
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COVID-19: IR35 reforms postponed until 2021

The Government has announced that the extension of IR35 reforms within the private sector will be postponed until April 2021 as a part of measures to deal with the coronavirus. However, it is our understanding that the Government still intends to press ahead with implementing the measures. All businesses need to review their current working arrangements and […]

Insights
Tax
18th March 2020
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