In this article, we’re taking a brief look at FRED 82 consultation responses, HMRC’s consultation on charities tax compliance and our Charity Commission special in this month’s newsletter.
FRED 82: FRC consultation on amendments to FRS 102 now closed
The consultation on proposed changes to FRS 102 represented an opportunity for charity sector members to draw attention to financial reporting rules that don’t work for the third sector. As we reported, charity reporting under the Charities SORP is underpinned by FRS 102 and, in the hierarchy of UK accounting standards, FRS 102 requirements take precedence over the SORP. This means that it was crucial to reflect user voices from the charity sector in the updates to UK GAAP where possible.
ICAEW’s consultation response encouraged FRC to engage closely with the charity sector and the charity SORP making body to fully understand charity-specific concerns, such as comparatives, accounting for non-government grants, legacy receipts and donated goods and services, and to consider whether there are any suitable solutions. Lease accounting changes are likely to be a significant challenge for smaller charities that do not have the benefit of FRS 105. ICAEW encouraged FRC to hold further discussion about the reporting requirements for smaller charities more generally on the grounds of proportionality.
The Charities SORP-making body’s response to FRED 82 urged FRC to consider that over 99% of registered charities would be classed as ‘small’ in company law terms and require a reporting framework that is “more suitable for their needs in terms of the transactions they commonly have and the needs of those who use their annual report and accounts.”
HMRC Consultation: Charities tax compliance
HMRC is looking at updating charity taxation rules to help tackle non-compliance and to boost the sector’s integrity without changing the overall purpose of reliefs. The consultation is open until 20 July 2023.
Kevin Russell ACA CTA from the Charity Tax Group outlines the risk of unintended consequences, such as increasing the administrative burden for otherwise compliant charities, in an article for Charity Community members.
Charity Commission special
In the June newsletter, you will find two articles from the Charity Commission for England and Wales to update you on recent changes to the guidance on internal financial controls (CC8), and to explain how charity registration applications are evaluated by the regulator. Some of you had reported delays in registering charities, so we’ve asked the Charity Commission to tell us why turnaround times can vary and how to prevent delays.
We’re delighted that Daniel Warner, Case Manager in the Registration Division of the Charity Commission, has agreed to give us an insight into the team’s work. In a series of articles, he will outline common application problems, simple solutions and handy hints and tips for getting your charity registered.