Professional Advice

A place to discuss the issues relating to the proposed change in the national CTC’s structure.
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Professional Advice

Postby admin » 14 Jan 2010, 5:46pm

Reply to this topic for general comments about this page on the main CTC site: Professional Advice

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If this thread gets excessively long, or new topics emerge within the discussion, the moderators may also split this thread into separate topics.

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Re: Professional Advice

Postby Fonant » 16 Jan 2010, 11:14am

It appears that the advice that CTC should become a charity mainly comes from a single document, the Cass Business School report, written by their Centre for Charity Effectiveness. The second advice document, from the CTC's own solicitors, starts with the assumption that the CTC should become a charity.

The Cass report looked in detail at CTC's structure, which is excellent. Their recommendations for CTC were based on reading lots of documents, interviewing senior staff and Council members, and attending CTC management and Council meetings. It is clear, for many reasons to do with management efficiency and worries about conflicts of interest, that Council members would prefer to become a single charity. But they don't appear to have talked to any significant numbers of the CTC membership, whose subscriptions provide a massive 75% of the club's income (and about half of the Trust's income).

Can anyone tell me whether the views of a sample of the CTC membership were taken into account, along with the views of the 30 senior CTC people who were interviewed? I know that surveys show that we mostly think that CTC should be "for all cyclists", but that's a different thing to asking whether CTC should be a club (funded by members in return for benefits) or a charity (funded by members with fewer direct benefits expected).

While it may well be the best thing for the CTC to become a single charity, I'm worried that a significant number of members (not necessarily a majority, but a large number) feel ignored in the decision-making process. This appears to be surfacing in the worry that the AGM vote might be "rigged" in some way, as this appears to be the only chance for club members to have their say. Should these members, who prefer a membership organisation, decide to leave the CTC if it becomes a charity, the CTC might suffer some loss in income. Perhaps this has already happened, with the large amounts donated by the CTC to the Trust, but I still feel that people think of subscription payments to CTC as a club in a different light to Sustrans as a charity.

Has the CTC done research into any possible change in membership numbers should it change from being a membership organisation to being a charity?
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Re: Professional Advice

Postby Regulator » 18 Jan 2010, 8:48am

The Cass Report was originally commissioned by the Governance Working Group. of which I was a member. The brief was changed by The Powers That Be without reference to the Governance Working Group, including the groups of people that Cass should speak to. Cass did not fulfil the brief given to it.

Of course Cass didn't speak to 'ordinary' members. The Powers That Be are of the opinion that they, not the members, know best.

The advice from the solicitors is no more than a 'cut and paste' job from a somewhat dated information sheet that is available for free on the solicitors' web-site. National Office has not revealed how much was paid for this 'advice'.

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Re: Professional Advice

Postby thirdcrank » 4 Feb 2010, 7:22pm

http://www.steerdaviesgleave.com/servic ... e/cycling/

As mentioned elsewhere on the forum, Steer Davies Gleave is a transport consultancy company; among other things, it seems the CTC lost some Bikeability business in their direction.

I was bemused to note that among their clients on the 'cycling' page in my link, they include the CTC. Can anybody enlighten me as to why this is the case and what it involves?

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Re: Professional Advice

Postby Regulator » 27 Mar 2010, 12:22pm

CTC has published the advice it received from Cass Centre for Charity Effectiveness - and makes much play of the fact that this supports the proposal to make the Club a charity.

CTC has published the advice that it has received from its solicitors, Russell Cooke, on the legal implication of the club becoming a charity.

CTC says it has taken specialist tax advice about the Club becoming a charity - but it hasn't published this advice... why not?

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Re: Professional Advice

Postby thirdcrank » 29 Mar 2010, 2:38pm


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Re: Professional Advice

Postby Regulator » 29 Mar 2010, 2:50pm

thirdcrank wrote:http://www.ctc.org.uk/resources/About_Us/CTC_Merger_Tax_Report.pdf

I think that's the specialist advice.

http://www.ctc.org.uk/resources/About_U ... ummary.pdf

That's the summary



Yep - quite well buried, isn't it... :wink:

Our expert gremlin is poring over it as we speak. Somehow, I think our summary of the contents may be slightly less rosy than theirs... :D

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Re: Professional Advice

Postby Simon L6 » 29 Mar 2010, 9:09pm

Colin Quemby has been raising this very matter for months

Previously trading income was not taxed in CTC as it was regarded as mutual trading between
members. This is no longer applicable once the organisation is a charity.
Charities are exempt from corporation tax on most types of income as long as the profits on that
income are applied towards the charity’s purposes. However there are some exceptions, the key one
being the restriction on charity trading. A charity is only exempt from tax on the profits from trading
activities if at least one of the following conditions is met:

1. Primary purpose trading: the trading activity is exercised in the course of carrying out a primary
purpose of the charity, or the work in connection with the trade is mainly carried out by the charity’s
beneficiaries
2. Fundraising events: the trading is part of a “qualifying fundraising event”. The activity must be an
event (this precludes ongoing trading activities) and it must meet the conditions for VAT exemption
in VAT Act schedule 9 group 12.
3. Small trades exemption: the turnover from the trade (together with the turnover from all other
trading that does not meet any of the above conditions) is less than £50,000 per annum.

Investment in CTC Tours

CTC has invested in shares in CTC Tours in order to give CTC Tours sufficient capital to meet its
bonding requirements. If the activities of CTC Tours are considered primary purpose or within the
objects of CTC once it is a charity, then there will be no need to worry about whether or not the
investment is a qualifying investment as there would be for a trading subsidiary.
However CTC Tours provides holidays, albeit cycling holidays, and only to CTC members so it may not
be considered primary purpose by HMRC. Any new investment would therefore have to meet the
above criteria for a qualifying investment. The existing investment should not provide a problem
however as it was made before charitable status was obtained. However as part of being good
trustees and ensuring good use of all assets of the charity, Council members should review the
investment from time to time and ensure it makes good commercial sense as above.

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Re: Professional Advice

Postby Simon L6 » 29 Mar 2010, 9:20pm

this is good

HMRC require the donor to have known the gift / benefit split at or before the time of the payment. So
you could, for example, in the subscription invoices and reminders, include a statement of the split of
the payment between its gift and payment components for gift aid purposes.


wording the renewal notice to let members know that they'll be getting nine quids worth of services for their money is going to be a challenge.........

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Simon L6
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Re: Professional Advice

Postby Simon L6 » 29 Mar 2010, 9:22pm

Gift aid
• The first step will be to value the benefits provided to the different categories of member and
establish, for each category, if the 25% / £25 donor benefit limits are broken. Based on these
calculations you should then decide if you want to restructure the membership subscriptions and
associated benefits. You will also need to take into consideration any VAT implications.


goodness!

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Re: Professional Advice

Postby gaz » 29 Mar 2010, 10:50pm

Thanks for those links TC.

Simon L6 wrote:this is good

HMRC require the donor to have known the gift / benefit split at or before the time of the payment. So
you could, for example, in the subscription invoices and reminders, include a statement of the split of
the payment between its gift and payment components for gift aid purposes.


wording the renewal notice to let members know that they'll be getting nine quids worth of services for their money is going to be a challenge.........


Well if someone's trying to make 100% of membership a Gift Aid eligible donation there won't need to be much wording at all. IMO that's unrealistic. I don't think National Office have ever suggested that will be the case.

OTOH if someone's got to work out a split then it's easy to give the explanation, e.g. £30 membership services payment, £6 donation eligible for Gift Aid. The hard bit is working out the split and agreeing that with HMRC.
2020 : To redundancy ... and beyond!

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Re: Professional Advice

Postby Simon L6 » 29 Mar 2010, 11:10pm

actually they've been implying all sorts of numbers. The CASS report gave a range of options, and the most likely of those gave a benefit of £57,000 - but the implication on the CTC website is that it could be greater than that, and I've heard the figure of £200,000 bandied about.

The truth is that
- we're in the hands of HMRC, who may or may not decide that (for instance) the magazine offers public benefit.
- we don't know how many individual members can or will sign up

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Re: Professional Advice

Postby Simon L6 » 29 Mar 2010, 11:41pm

whoa! Will the surplus on the Hilly 50 be subject to Corporation Tax? And what about the surplus on Holidays and Tours?

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Re: Professional Advice

Postby robgul » 30 Mar 2010, 8:10am

Simon L6 wrote:whoa! Will the surplus on the Hilly 50 be subject to Corporation Tax? And what about the surplus on Holidays and Tours?



I'll have to check out the takings on the 20p levy we collect on our twice-weekly club runs ....

The "tax advice" seems to be little more than a list of issues that need to be considered, not real answers or recommendations - which just turns the consultancy merry-go-round one more (expensive) revolution

Rob

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Re: Professional Advice

Postby gaz » 31 Mar 2010, 9:13am

Simon L6 wrote:actually they've been implying all sorts of numbers. The CASS report gave a range of options, and the most likely of those gave a benefit of £57,000 - but the implication on the CTC website is that it could be greater than that, and I've heard the figure of £200,000 bandied about.


Up until now I've been comfortable with the £57,000 figure which appears, amidst a range of others, on the website FAQs. I'm happy to make my decision based on that figure being realistic. However in the latest Cycle I read "We can boost the income of the CTC by up to £100,000 a year". There's no published justification for this sudden increase.

Have National Office got some shiny new groupset to increase the yield of the Gift Aid red herring?

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