UK Regulators have updated their joint guidance on Matters of Material Significance reportable to UK charity regulators.
Any person appointed as an independent examiner or auditor for a charity has a duty to report matters of material significance to their respective charity regulator. The guidance explains what the matters of material significance are and provides some further explanation of each of the matters. It has been jointly published by the Scottish Charity Regulator (OSCR), the Charity Commission for England and Wales (CCEW) and the Charity Commission for Northern Ireland (CCNI).
This latest update:
The Response, Recovery and Resilience Fund is aimed at helping charities organisations through what are unprecedented times. The primary focus of the fund is to support groups that are adapting to local needs such as projects reaching vulnerable people that are self-isolating, vital help for foodbanks, aid for community response co-ordination, the purchase of safety equipment for caring groups and funds for those supporting health and wellbeing needs with Covid-19.
Third Force News: Read More
The UK Government has taken the unprecedented decision to allow employers to furlough employees and apply for a grant that will pay 80% of the employee's PAYE salary up to the value of £2,500.
The first two lines of the Government guidance reads as follows: If you cannot maintain your current workforce because your operations have been severely affected by coronavirus (COVID-19), you can furlough employees and apply for a grant. The keywords that the Government and businesses need to look at here are "cannot" and "severely". In short, this action is only to be taken if your business is unable to proceed during this crisis and would become bankrupt or experience severe financial difficulty if this action were not taken.
However, there are some very important conditions that must be met in order for this grant to be accepted.
Furloughed staff cannot perform any work while furloughed. Phone calls cannot be taken, emails cannot be read or replied to, social media accounts cannot be updated. All of these actions constitute work. Critically, it's highly likely that the Government will audit many firms and staff who applied for grants during this time. This will happen in a year or so, when the immediate crisis has passed, and if they find any evidence that the business continued to run then it is highly likely that they will attempt to claim back the grant money through taxes.
When it comes to voluntary work, the guidance is as follows: A furloughed employee can take part in volunteer work, if it does not provide services to or generate revenue for, or on behalf of your organisation. Your organisation can agree to find furloughed employees new work or volunteering opportunities whilst on furlough if this is in line with public health guidance.
A. E. Radley
The bottom line is, if you have been furloughed then you mustn't do any work. In doing so, you run the risk of invalidating your claim for a grant and then it will be reclaimed in the future.
The key guidance for EMPLOYERS on the principles of CJRS (which is being regularly updated) is at: www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
There is a step-by-step guide for employers (7 page PDF) at: www.gov.uk/government/publications/coronavirus-job-retention-scheme-step-by-step-guide-for-employers
Details of how to calculate the 80% salary costs (see below for more on this) are at: www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job- retention-scheme including a useful online calculator being made available from 20 April.
Company Debt has put together a list of the packages available for small businesses at this time.
This week's COVID-19 Special Newsletter was slightly delayed because we wanted to gather as much information as possible about guidance for specific groups of beneficiaries.
Please see the guidance section below for information on safeguarding for children, animal welfare, and mental well being, as well as news about funding for charities working on food distribution.
Much of this week has been spent alongside other sector support bodies, making the same old arguments about the value of charities to government. What is increasingly clear now is that government does not understand how charities work, how diverse and different we are as a group of organisations, and what our individual and collective role is, and could be at a time of national crisis.
As part of our collective effort all the sector support organisations have been contacting media outlets to make journalists aware of the issue and you would have hopefully seen increased mention of charities on prime time television news. SCC has been contacting journalists and media outlets on behalf of members whose stories, in the first instance we believe will support our collective campaign for a 'stabilisation fund'.
We have also made representations to the DCMS Select Committee which convened an urgent meeting to explore the Impact of COVID-19 on the Charity Sector.
You can read the Small Charities Commission submission of evidence and those made by other agencies here
For Small Charities Coalition members in immediate crisis because of funding, and who have less than 30 days we have also set up a special task force group to help, with expert advice on finances, HR, management and fundraising.
To access the service please email COVIDclosureresponseteam@smallcharities.org.uk
DESPITE CORONAVIRUS, TODAY IS 31 MARCH -
SO IT'S YEAR END FOR A WIDE RANGE OF CHARITIES
Forgive us sending a Kubernesis Bulletin which you might consider is a
statement of the obvious! But we just wanted to draw attention to the
fact the TODAY is 31 March 2020, so it's the financial year end for many
It's also worth nothing that this coming Sunday is 5 April, the end of
the tax year. So for anyone trying to get gift aid donations within the
current year, there are only 3 working days left (Wed-Fri).
With many charities rising to new challengs in the light of the
Coronavirus crisis, it would be easy to overlook obvious things like year
end, especially if everyone is working away from the charity's normal
However, our advice would be: don't overlook your year-end processes,
notwithstanding the crisis.
You might think "We have more important things to deal with at this time -
can't we just postpone our year end?"
Well, it is POSSIBLE for a charity to change its financial year (let us
know if you want more details). But we believe that for most charities,
the last thing you want at this time is the confusion of working to
non-standard financial year. If you were to change to (say) 30 April
this year and then wanted to go back to a 31 March year end in 2021 you
would be dealing with a 13 month year and then an 11 month year which
would make comparatives difficult (and to change the year end twice in a
row can require special consent from charity regulators).
So, we suggest sticking with today as the year end if 31 March is the
normal date. Try to make sure you have some means of putting a figure on
everything as at the end of today. If you can't accurately count your
petty cash or your stock at least work on the best possible estimate.
But, as usual, wait for year end bills to come in before trying to close
off figures on your accounting system. Given that many suppliers are
themselves disrupted you might want to allow a bit more time than normal
for those final bills, and if the charity's offices are closed do make
sure someone pops in occasionally to check for post - you don't want to
overlook bills that still come by post.
As usual, please get in touch - firstname.lastname@example.org - if you have
queries where you think we may be able to help.
Kubernesis Bulletin (c) 2020 The Kubernesis Partnership
These Bulletins are prepared primarily for clients who belong to the
Kubernesis Charity Advice Service. However, it may be forwarded to
others (whether in your organisation or elsewhere) so so long as the
source is acknowledged.
These notes are intended to provide general guidance only. Legal issues
are reported only in summary form and are not a full statement of the
If you have any queries on the points mentioned, including issues for
your own organisation, please contact Dr Gareth Morgan (Senior Partner)
at email@example.com. There is no charge for responding to reasonable
queries as you belong to the Kubernesis Charity Advice Service.
The Kubernesis Partnership LLP - Charity Consultants
10 Kings Court, Dunbar EH42 1ZG
Tel: 01368 864582
A limited liability partnership - registered in Scotland no SO306613
E-mail: firstname.lastname@example.org (For changes of contact details only)
E-mail: email@example.com (Advice queries - This address is ONLY for
clients who subscribe to the Kubernesis Charity Advice Service)
E-mail: firstname.lastname@example.org (General queries)
At last we have the detailed information relating to the Coronavirus Job Retention Scheme.
The scheme is aimed at employers who would otherwise have to lay off employees because
· They had to close their business on Government instructions
· Business has slowed down and there are staff members who are not required to keep the business functioning.
The Government will create a portal where you will upload information about employees you have furloughed. You can then recover 80% of their salary costs up to £2,500 per employee. You can also recover the employers’ NIC contribution and the minimum 3% employer pension contributions. This is more generous than we had anticipated.
All employers who had created and used a PAYE scheme before 28 February 2020 and there are no restrictions on the type of business than can apply, so charities, partnerships, agencies who employ workers and of course sole traders who employ staff.
Who doesn’t qualify?
If you have an annual scheme set up before 28 February but not yet used, then you won’t qualify.
Which employees qualify?
You can furlough any employee who isn’t immediately required for the operation of your business during the Coronavirus outbreak. They can be:
· Full time
· Part time
· On agency contracts
· On flexible or zero hours contracts
You can also re-employ any employee you made redundant in anticipation of coronavirus downturn. This will not only assist the employee but also the system as they will not have to apply for Universal Credit which is currently overloading the DWP.
What is a furloughed Employee?
If you furlough an employee, they cannot do any work for you at all. If they are an agency worker, they cannot do any work at all.
If you decide to reduce staff hours, then they are NOT furloughed, and you must pay their salary as normal. You may only use this scheme to recover the costs for employees who are NOT doing any work for you.
If you have staff who were on unpaid leave before 28 February 2020 you may not furlough them.
Staff on Statutory Sick Pay may be placed on furlough once their self-isolation or sickness period has expired, and staff who are required to shield due to pre-existing conditions can also be placed on furlough.
What do I need to tell the furloughed staff?
You are changing their terms and conditions and so you should negotiate and discuss furloughing with your employees and ensure if not all employees are being furloughed that it is done with regard to equality and discrimination law. You should also give them a letter confirming they are furloughed and keep copies of all correspondence.
Staff on Maternity Paternity and Adoption Leave
There are no significant changes to the statutory maternity pay provisions but of you offer enhanced maternity pay, over and above SMP you may claim this element via the portal.
The paternity and adoption leave schemes mirror the maternity scheme.
How do I claim?
You can recover the lower of £2,500 or 80% of basic gross pay plus the minimum employer pension contribution and national insurance. You cannot include bonuses or commissions or other fees. The basic gross salary should be that as at 28 February 2020.
What if an employee is paid a variable wage?
If someone has been employed for at least 12 months you should use the higher of:
· The same month’s earnings for the previous year
· The average monthly salary for 2019/2020
If you do not have a 12-month employment period then use the average for the period of the employment.
If they started in February use a pro-rata amount.
What is 80% takes an employee to below National Minimum Wage?
NMW/NLW does not apply as the employee is not actually working. However, if you require employees to do training while on furlough, they must be paid at the appropriate rate for the hours worked.
Can I deduct an admin fee for processing what is essentially a state benefit?
No, you must pay your employee the full amount due to them, you may only deduct the usual statutory deductions. You cannot charge a fee.
How do I treat the grant in my accounts?
The grant is a taxable replacement for income you will lose due to Coronavirus. It should be included as income in your business accounts.
If we operate your payroll then we will have most of the information required to make the claim all you will need to give us is the names of the employees, you wish to furlough.
Once each claim has been made via the portal the repayment will be made to your UK bank account, so we will also require the sort code and account number and name.
Best wishes and stay safe
K M Business Solutions Limited
CORONAVIRUS UPDATE – 26 March 2020
We now have a little more information regarding ‘Furloughed Workers’ following yesterday’s update.
It now seems to be widely accepted that HMRC, via their online portal, will ask that you make the 80%
payments, report it at each pay period and then reclaim it through the system they are creating.
In this circumstance RTI will still need to be submitted and all appropriate PAYE and NIC deductions
will likely need to be made at the time. Base salary is expected to be included only.
It is expected that HMRC will then reimburse you after the RTI submission as they will then hold the
information required to do so. This will likely begin in April as they state that the first grants will be
paid within weeks.
As a precaution, you should still withhold making these 80% payments until told to do so by HMRC as
they may be under no obligation to reimburse you retrospectively. This is even though they will
If you are worried about cash flow in the meantime, HMRC recommend that you take advantage of
the Coronavirus Business Interruption Loan.
Remember, it is the employer who decides whom they wish to furlough, but this must be done in
consultation with the employee who may then refuse to be designated. If they do however accept,
please get in touch with us at SHR Group so that we can make the necessary contractual arrangements,
as required under employment legislation.
The scheme is intended to avoid redundancies but if these become necessary, you must follow due
procedures so don’t forget to consult with us first.
The Coronavirus Job Retention Scheme will cover the cost of wages backdated to March 1st and is
initially open for 3 months but will be extended if required. Once you are informed that the new online
portal is live, submit information to HMRC regarding the employees that have been furloughed and
their earnings (HMRC will set out further details on the information required).
Which Employees are Eligible?
All UK employees who are paid through the payroll irrespective of business size. This includes agency
workers, apprentices, charities, public sector and private sector.
CORONAVIRUS UPDATE – 25 March 2020
Further to our release of information regarding ‘Furloughed Workers’ in yesterday’s update
(appended again below), I now have additional information for you to consider.
Although we do not yet know the mechanics of the 80% support payment scheme it does seem likely
that for logistical purposes, the government may choose to ask that you make the 80% payments,
report it at each pay period and then reclaim it through whatever system they are creating.
This is where present thinking is headed but please do not take this as concrete advise either from
SHR Group or anyone else, it is just something that HR and employment lawyers have been discussing
and believe may actually be the case. If that is so then we all need to be prepared, but if not then we
will be informed next month exactly how the scheme will be administered.
It’s clearly a case of ‘watch this space’, but please be aware of the following matters that you should
National Insurance and Income Tax
If businesses are asked to make direct payments of 80% to their employees, we may need to make
provision for deductions of PAYE, N.I. and pensions. So ahead of the announcement next month we
need to be sure our systems or payroll providers are geared up to do this efficiently and accurately.
National Minimum or Living Wage
If we pay our employees 80% of salary, we may need to consider whether or not they will then drop
below the required minimal pay levels.
It may be wise to prepare to make up the shortfall in those circumstances as it is likely to be for just a
small number of people however, government are considering this issue at present and it is fairly
certain that they will issue guidelines.
The Commission has found the decision to loan half a million pounds to the company of a former trustee was misconduct and/or mismanagement, in an inquiry into the Jewish Seminary for Girls (JSG). Two former trustees have been disqualified.
The Association of Charity Independent Examiners
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