It is difficult to predict what the outbreak of COVID-19 will ultimately have on the UK economy and the organisations which operate within it. This article looks at the operational considerations Trustees should be thinking about in the short and medium term.
Financial support for charities
Trustees should take immediate action on the various support measures introduced by the government. These would include:
Statutory Sick Pay “SSP” for small or medium-sized businesses
- SSP for qualifying employees is now payable from day 1 for those who self-isolate or are unwell because of COVID-19 (the first 3 days are normally unpaid). The current rate of SSP is £94.25 per week.
- Small and medium- sized employers may recover this cost where SSP has been paid as a result of COVID-19 from 13 March for a maximum of two weeks’ sickness per employee.
- It will cover charities with fewer than 250 employees.
- Website information:
Coronavirus Job Retention Scheme
All charities are eligible, the intention being to provide grants to encourage charities to “furlough” employees rather than lay them off.
- Grants are available to cover 80% of the wages (up to a max of £2,500 per month) of any employee who would otherwise have been laid off due to COVID-19.
- The scheme will run initially for 3 months but may be extended.
- Claims can be backdated to 1 March 2020.
- No limit on the size of business or sector that is eligible.
- Applications are made to HMRC through a new online portal.
- Affected employees will need to have been individually identified and notified.
- Website information:
Grants for retail, hospitality and leisure businesses
Charities are eligible for these grants if they have any retail shops.
- A £25,000 grant is provided to charity shops operating from premises with a rateable value between £15,000 and £51,000.
- Smaller grants (£10,000) are available for charity shops operating from premises with a rateable value under £15,000.
- Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority. Funding is be provided via local authorities.
- Economic Development Officers at your local town or city council should be able to advise on local arrangements.
- Website information: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses
Time to Pay arrangements (TTP)
This is available to charities to allow them to defer payment of PAYE/NI deductions from payroll, and VAT for those who have trading subsidiaries and/or charity shops. Note that it is a deferral and not a write-off of the debt.
- TTP allows a charity to defer current tax debts (mainly payroll taxes and VAT) by converting settlement to instalments over a 3-12 month period. These need to have been fully paid by 31 March 2021.
- Trustees are expected to provide written confirmation that the instalments will be made on time.
- Any charity is theoretically eligible to apply. It is, however, critical to ensure supporting facts (and documentation) are available to evidence cashflow concerns.
- HMRC expect the taxpayer to demonstrate that other sources of finance have been pursued and exhausted.
- Contact HMRC’s helpline on 0800 0159 559.
- Website information: https://www.gov.uk/difficulties-paying-hmrc
Charity reserves and their use
Trustees of all charities should take stock of their financial position and take steps to protect the charity’s assets and undertakings. Trustees will be concerned about the effect of the virus on their financial position, and on their reserves. In the first instance, Trustees should consider what their short, medium and longer term priorities are, and see if they need to amend their financial planning given the current situation. Trustees should think about whether or not certain projects, spends or activities can be stopped or delayed in order to focus on essential spending only.
Trustees should identify which of their funds or assets have restrictions on their use. Designated funds may be re-prioritised to assist with the availability of unrestricted reserves, but restricted or endowed funds need to be identified to ensure that they are not used for any purpose other than that for which they were provided.
Any decisions concerning reserves must be taken collectively, which given the current circumstances might be difficult, so meetings by email or other online means should be carefully minuted.
AGMs and other key meetings
The current situation requires that all events that require attendance by any number of people cannot take place. It is therefore necessary to postpone them or to explore other ways of holding them, such as telephone, email or other online means. Some charities already have clauses in their governing documents that allows them to meet virtually. Where no such clause exists and Trustees decide to do so, they should record their decision to demonstrate good governance. Again, the decisions that were taken should be carefully minuted. For those charities that have a filing deadline approaching and are unable to finalise their accounts or file their annual return, the Trustees should advise the Charity Commission by contacting filingextension@charitycommission.gov.uk for those charities registered in England and Wales, or by completing the online contact form at https://www.oscr.org.uk/contact-oscr/contact-form for those registered in Scotland