Help with Gift Aid & VAT Exemption

community

#1

Hi, I am a Squadron treasurer and have recently been tasked with a couple of jobs and would appreciate any help, guidance, do’s & don’ts from people who have advice to offer.

We want to apply for gift aid on subs received from cadets, we have had a lot of new cadets in the last few months so in preparation included a gift aid declaration form in the welcome packs we give to parents of new cadets, we have received a good response and had a lot of these forms returned. I contacted our local tax office for advice but after having been passed around a few people I have reached the conclusion from a lot of conflicting advice received that nobody is completely sure on how the system works!

Another item I have been asked to look at is to purchase some medical training equipment to assist in First Aid training namely training defibrillators, coincidentally the week after I received the request I attended another meeting where I learned that medical training equipment being purchased by or for a charity can be bought without being charged VAT. I have contacted the supplier who informs me I need to provide proof of the VAT Exemption and they will be happy to supply, only question is How do I get this exemption proof.

Can anyone help?


#2

There is a letter hidden away on Bader, entitled:

AIR TRAINING CORPS SQUADRON EXCEPTED CHARITABLE STATUS

  1. Currently most Squadron Welfare Funds hold excepted charity status (distinct from exempt status), which was applied for through HQAC to the Charity Commission of England and Wales who then issued an excepted charity number and an acknowledgement certificate, one for the Squadron (blue paper with a red wax type seal on it) and one copy for HQAC records. This policy stems back from the 1960’s when certain charities were excused the requirement to register with the Charity Commission because they were already registered with their own umbrella groups and mainly covered various religious and armed forces charities. This means that Squadron Welfare Funds are exempt from direct Charity Commission supervision because they are considered to be adequately supervised and accountable to HQAC. Excepted charities enjoy the status and fiscal benefits accorded to a registered charity and are required to comply with the key principles of charity law; however, they are not subject to the same administrative requirements as charities registered with the Commission. Instead squadrons submit an Accts Form 60 (ATC summary of receipts and payments) to their Wing for scrutiny and copies must be held for 7 years. However, the Charity Commission can call in the Squadron accounts at any time for checking purposes.

  2. Those excepted charities with an annual income of £100K or over must register with the charity commission in their own right. The £100K threshold is an interim level and may be reduced in the future but this will not happen until there is a further review of the Charities Act.

  3. However, with effect from January 2012 the Charity Commission no longer issues excepted orders/certificates to newly formed squadrons following the legislation change brought in by the Charities Act 2011. Nevertheless, this does not affect the status of current squadron excepted charities or indeed any new squadrons that are formed in the future.

  4. Excepted Charities may however apply to HM Revenue and Customs for a Tax Reference, recognising them as Charities for the purposes of Taxation and Gift Aid.

  5. New squadron charities can prove their status by having a copy of their constitution, objects and the Royal Warrant. None of the above conflicts with the Royal Warrant, or indeed with the relevant internal administrative regulations governing individual squadrons. What determines if any particular ATC Squadron is a Charity and if it is an Excepted Charity, is quite simply its objects and income level.

  6. The Charity Commission of England and Wales have confirmed that the position/status of ATC Squadron charities (both already existing and as newly formed in the future) can be classed as excepted charities.

  7. Full details are in ACP 10 – Administration of ATC Public and Non-Public Funds, Chapter 2 and ACP 11 – Administration of Civilian Committees in the ATC – these publications can be accessed via BADER.

I did a quick search under “charitable” & found this old topic.


#3

Mike my understanding at the moment is that as Excepted Charities we have limitations such as not being VAT Exempt and not being able to claim giftaid without a form? (There is the new type of giftaid which allows charities to claim back giftaid on small donations such as those from bag packs without the need for a form.

Am I right in thinking that if Squadrons all applies for full Charity Status we could then claim back VAT? This would Male a real financial difference wouldn’t it?


#4

Dunno for sure - I trawled through Bader to find the listed document.

HMRC application / recognition process.

ACP10 (Chap 4) lists the requirements to ensure that any Civ Comm financial accounts adhere to the Charity Commission rules for excepted charities - including the completion of Form 60 (suggested action date Apr / May each yr).


#5

Speak to the Wing treasurer or local sqn treasurer as they should have forms you can adapt.

We can’t claim VAT which given how much sqn spends on what are effectively educational supplies is a pain.

As for gift aid register with the HMRC, get a form signed by parents saying they pay enough tax to cover the claim, keep records of subs paid put in a claim. When we started this it was 28% of subs but is probably now 20% inline with basic tax rate.

Be aware that cadets over 18 have to fill out their own gift aid form (as long as they pay enough tax to cover the claim) as unlike the ATC the rest of the world sees them as proper adults and have to take responsibility for their own affairs.


#6

That would depend on who is making the donation to the squadron (subs) is it adult cadet or the parent on the pre-existing Direct Debit.

Don’t forget it’s not just subs, cadet pays £10 for weekend camp to the squadron, this can also be claimed …


#7

Bear in mind that if the squadron does or could pay expenses; e.g. mileage allowance; to anyone associated with it and they donate it then it may be processed for gift aid. For example the Civ Comm members could be paid mileage allowance when they attend meetings, if they do not claim it then it would be eligible for gift aid if treated as a donation. However it is imperative that you keep clear and accurate records of all gift aid transactions.

Exmpa


#8

I wouldn’t be too sure about the over 18s. I am pretty certain this was something that our CWC was told when we first embarked on claiming gift aid 11/12 years ago.

If it is your first time doing gift aid, you can backdate several years.


#9

Interesting - I am sure that you will agree there is a distinction between Excepted and Exempt and as a matter of fact both are categories appearing in Charity Law. Neither relate to VAT exemption as that comes within the jurisdiction of the Revenue & Customs.

Whilst these two categories and also registered status are well defined within Charity Law, there is some distinct blurring of the application as it relates to ACO Charities. This is not helped by the review of Governance which has added to the confusion, One notable addition is the discovery that Charities are required to be managed by Trustees, so ACP11 introduces this requirement ignoring the fact that Trustees are defined by totally separate legislation, and as Charity Law pre-dates The Charities Act 2011, the ACO related Charities have always had Trustees in the form of the Civilian Committee members.

The 2011 Act actually ended Excepted status for new Charities on and from 31 January 2009, therefore Statute appears to say that any New Charity, after that date, is required to be registered. The ACO seems to have a different interpretation which has yet to be substantiated.

Mention of Form 60 is another contentious issue; Excepted Charities are required to prepare and maintain annual reports and accounts, but there is no requirement for any annual submission to the Charity Commission; the ACO has come up with Form 60, which has no basis in statute, and yet the ACO perceives they have powers akin to the charity regulator. This is where the ACO believes it has powers of control over Trustees, when in fact Trustees are accountable to the Charity Commission, and bound by Statute, but not under the control of the Commission other than where the Commission is required to intervene ‘in the interests of the charity and for the protection of charitable funds’
Whatever perception the ACO, there is no evidence to suggest that after Form 60 there is used to monitor that charitable monies are applied properly and consistently in accordance with the aims and objectives by the authorised Trustees, for the benefit of the Cadets. Instances of payments for Car hire and probably air fares for overseas visits by non beneficiaries come to mind.

At present it is doubtful that whatever is said in ACP10/11 is a true and indicative (and legally qualified) statement of charity law. It is not then clear how the Law has ceased the granting of Excepted status, yet new Squadron charities can claim to be Excepted, when this was always dependent upon the Commission making a specific Exception order. Ultimately the requirement will be that all Charities will be Registered as is the Law in Scotland and Northern lreland.

As far as VAT is concerned, as a not for profit organisation, and the majority of ACO charities with modest income/turnover, it seems hardly worth the hassle of further administration. But when you read up, it seems more a matter that certain goods and services are exempt and the ACO is not a supplier of goods and services.

It also seems that for any VAT involvement, you need a Charity Registration number, which you don’t have as an Excepted Charity and neither does the ACO, because the ACO is not itself a Charity. But you can claim back VAT if you are registered for VAT, but that threshold is high and way above most Squadron income level.

But this is a decision that Trustees can make themselves in their remit to manage to Charitable funds, in the same way that they can decide to become a registered charity, if they determine it to be to the advantage of their charity.

Gift Aid: when this first thrust itself upon the ACO, there was a requirement for a signed declaration to confirm status as a UK tax payer. There was potential to retrospect this over 6 years - you can imagine the work entailed in contacting all the adults over this period, because sadly the ACO has always had a high rate of attrition. When I was Treasurer, supported by my colleagues, it seemed to involve an inordinate amount of time, so we did not pursue it. Currently the process does not require individual declarations, so why not look into it.

Aries


#10

When our CWC first undertook GA, they restricted it to cadets on the books at the time, at which point we had a number of cadets who had been around for 3+ years, so it was worth it.
If doing it now, it wouldn’t.