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‘Taking Control’ A Guide to setting up and running your own Self-Advocacy group, organisation or business.

Easy Read Guide

‘Taking Control’ A Guide to setting up and running your own Self-Advocacy group, organisation or business.

Easy Read Guide

Credits This guide has been written, designed and produced by Inspired Services with the help and assistance of Andrew Holman, Steph Moore, Darren Mather, Rohhss Chapman, Annie Lawton, Nicola Anson, Joan Scott, Eve Rank and other members of the 2002 National Forum and all the other self-advocacy groups and selfadvocates who have kindly given their help, comments, information and ideas. With special thanks to Carlisle People First for the use of their accessible constitution. Many thanks to all. Artwork is from the Valuing People clipart collection and cannot be used anywhere else without written permission from Inspired Services. To order the Valuing People Clipart Collection contact us as below: This guide is available in other formats. Please ask.

0800 0430 980

Cotswolds Centre Drive Newmarket Suffolk CB8 8AN



About this guide




About self-advocacy groups



Why self-advocacy groups choose to be independent



How an independent self-advocacy group could be organised Paying Tax




The money needed to run an independent self-advocacy group



The people who could work in the self-advocacy office



The planning that needs to be done before the launch of your self-advocacy organisation. What the words mean





About this guide This guide is about setting up your own advocacy group or independent organisation. It would even be helpful if you want to set up your own business.

Most organisations don’t do all the set up work themselves. They work on the parts they want to or the bits they understand and they then ask experts to work on the other parts like law, tax or money.

You may not understand everything in this guide but we hope that it will give you an idea of the things you need to do and the people who might be able to help you with other areas.

All the information was correct in April 2005 but things are changing all the time. It is really important to make sure you check with experts that you have up to date facts on important things like tax, the law and employing people.


How to use this guide Key Points are in a coloured box at the start of each part. We also use these symbols:

Who to talk to about something

Where to get more information about something

A decision that needs to be made by Group members

There were some things that we could not put into easyread without missing out important information. We have put this into a separate Extra Notes booklet.

We will use this picture when there is more information in the Extra Notes booklet.

Part 9 of this guide explains what the words in bold type mean. 3

1 About this guide Key Points

This guide is about setting up your own advocacy group or independent organisation or business.

The guide is in 8 parts. It lists all the things the self-advocacy group members will need to think about.

Some information might change over time so it is very important to check the details when you start setting up.


1 About this guide More information There are lots of things to think about when setting up a self-advocacy group or independent organisation or business.

Group members will need plenty of time to learn about and discuss the ideas so everyone knows what is happening.

This guide lists all the things that group members need to think about. It is based on what people with learning difficulties and their self-advocacy groups have said.

We have given examples based on these ideas but some things might change over time so we have told you who you can ask for to get up to date information.

Group members need to make a decision about this. There are also quite a few choices to make about how a self-advocacy group can be set up as an independent organisation.


These are the things that group members need to think about: Information about self-advocacy. This includes how and why self-advocacy works and what the group wants to do.

Reasons for being independent.

Information about how the group will be set up, its business name, trustees and how it will manage its money.

A budget for the first three years to show how much money the group will need, when they will get money and when they will have to pay it out.

The people who will be employed by the self-advocacy group and the equipment they will need.

A checklist or plan to show all the things that need to be done to prepare for being independent and self-run. The workbook will help you with this.


A lot of these things should be written down and put together. This is then called a business plan. The workbook will help you with this.

2 About self-advocacy groups Key Points There are many independent self-advocacy groups run by people with learning difficulties all over the country.

The members of self-advocacy groups often come from local areas and should manage and run the groups themselves. Usually they employ supporters. Self-advocacy groups should choose their own supporters.

The group members are the people who make the decisions about the group and what it will do. Self-advocacy groups help people speak up for themselves and campaign on issues that are important to the group. To get started groups need to involve as many people as they can and get everyone’s ideas including people from black and minority ethnic communities and people with higher support needs. It is important to talk to all the people involved. 9

What do the group members do? The group should vote on who they want to do some jobs. Those jobs are often called officers of the group.

The group votes on who they want to be Chairperson. The Chairperson helps the group to share their views and makes sure meetings are properly run.

The group votes on who they want to be Secretary. The Secretary prepares everything for meetings, takes notes and deals with letters.

The group votes on who they want to be Treasurer. The Treasurer looks after the group’s money and talks to the group about what’s happening with the money.

The group might want other officers to do other jobs such as co-chair, a deputy chair, a campaigns officer, a press officer and so on.


How self-advocacy groups are run These are the things that a lot of self-advocacy groups do, especially if they get money from their Local Authority. Make sure the group’s money is spent properly.

Make sure the group’s business is open and that there are no secrets.

Make sure that only self-advocacy group members make decisions about the group and that everyone knows about them.

Make sure any elections are fair and the results can be checked.

Decide how members want their supporters to work with them.

Include people with higher support needs and people from black and minority ethnic groups.


Support people to speak up for themselves.

Make sure all people in the self-advocacy group are listened to.

Make sure that jobs and responsibilities are shared out fairly.

Interview and employ someone to work with the self-advocacy group members if the group decides to do so.

Make sure the group does not spend more money than it has and keep good records to show how much has been spent.

Let people who give the group money look at these records whenever they want to.

Build up good contacts with self-advocacy groups and other networks around the country. 12

3 Why self-advocacy groups choose to be independent Key Points

There are reasons for being independent that you need to think about.

What type of independent organisation will the self-advocacy group be?

Where to get more information There is more information about this in Part 4.


3 Why self-advocacy groups choose to be independent Key Points

If the self-advocacy group is independent it should have its own bank account and its own office to work from.

Group members could talk directly to their funders about the money they are paid and the work they do. The group can do any work they decide on and may be able to get paid for it.

Being independent helps set a self-advocacy group up for the future, making it clear it is run by and for people with learning difficulties.


4 How an independent self-advocacy group can be organised Key Points There are different ways of setting up an independent self-advocacy group and different rules and laws for how each type of organisation must be run. The self-advocacy group could be a. a club or society b. a charity c. a company Sometimes groups are more than one of these things. If the self-advocacy group becomes a company, there is a limit to how much members would have to pay if the group had to close down and still owed people money. The self-advocacy group must keep records of the money. Group members need to make a decision about this Members need to decide what types of organisation they want their group to become.


Where to get more information

The Charity Commission

National Council for Voluntary Organisations

Companies House

029 2038 0801


4 How an independent self-advocacy group could be organised More Information 4a A Constitution You will need a set of rules for your group whatever sort of group you set up. This is called a constitution.

Carlisle People First have very kindly let us show you their rules as an example. This is right for them, but you will need to check it would be right for what you want to do.

The Accessible Constitution

The company name is: (Name of group)

(Name of group) will work in (this area) to:

“Empower and advance the education of people who have a learning difficulty or physical disability by providing independent advocacy support. It will also teach the public about Self Advocacy especially volunteers and professionals.�


Provide Self Advocacy by and for people with learning difficulties. (Name of group) can:

have a bank account and sign cheques.

do fundraising.

have an office.

employ support workers and give them company pensions.

work with other people like social services and other people first groups.



(name of group) can employ a solicitor an accountant or other money professional.

use money for expenses.

t Re n k Boo

pay for rent.

pay interest on money in bank accounts.

If (Name of group) has to close down and owes money to people, members of the group only have to pay ÂŁ1 each.

If (Name of group) closes down, members cannot take any equipment like computers or filing cabinets but we can give them to another charity which does the same sort of things.


Things (Name of group) have to do‌

1. (Name of group) must have an AGM each year.

2. If someone doesn’t know about a meeting by accident or because they forgot then that meeting should still happen.

3. The AGM must have a chairperson.

4. Anybody involved with the group can speak their own opinion at the AGM.

5. Decisions should be made by everyone in the group, not just a few people.


4b Being a club or society If your group is made up of a small number of people who want to run an organisation together setting up as a Club or Society might be a good idea.

Any money that is made is put back into the group. The group can have a special bank account for clubs and societies. This is often a free account.

The group has to write down a list of rules about the way it will be run. This might be things like how many people will have to sign cheques or how often they will have meetings. This is called a constitution.


4c Registering as a Charity A self-advocacy group can decide whether it wants to be a charity or not. It can become a charity after is has been set up. A charity can also be a not-for-profit company. There is more information about this in 4d.

Lots of people think that they have to be a charity to do voluntary work but sometimes it is better not to be. You could just be a Club or Society.

To be a charity an organisation has to write down what it wants to do and why it has been set up. This is called a governing document.

The charity Commission looks at this to see if the group can be a charity.

On the next page we have listed the useful and difficult things about being a charity.

These are just the main points and there is more information in the Extra Notes booklet.


Useful things about being a charity

They don’t usually pay tax.

They pay less in business rates on offices.

They can sometimes pay less VAT.

They often find it easier to raise money.

People know that the Charity Commission will be making sure they keep to the rules for charities.

Difficult things about being a charity There are strict rules about the type of things charities can do. Trustees are not usually allowed to make any money from being involved with the charity. Trustees have to be really careful that any decisions they make about the charity are not based on any other work they do. There are strict laws about the way a charity has to keep records about its money.


Trustees Every charity must be able to say who their trustees are. Trustees are the people who manage a charity. They may not do the day to day work but are in charge of how things are run. They may be called different names: executive committee management committee board directors council of management.

Whatever they are called, the trustees’ job is to make sure the charity is run properly.

There are laws about who can or cannot be a trustee and about the things they can do.

Trustees must be very careful that they do not have a conflict of interest. This means that they must be able to think about what is good for the charity, not what is good for them or other organisations they are involved with. Trustees have to make sure the charity keeps records and writes a report each year to show what money the charity gets, how it is spent and the work they have done. 24

Audit – someone independent checking the money. An audit is when someone who does not work for an organisation checks all the records they have kept about their money.

There are different rules about audit which depend on the type of organisation and whether it is registered as a company or not. Self-advocacy groups will also have to do different things, depending on how much money they get each year.

Auditing to check that everything is OK with the money must be done properly. It is something that people study at college for a long time to really understand.

We have put some more information in the Extra Notes booklet but feel that it is important that self-advocacy groups talk to an accountant to make sure they are keeping proper records of their money.

You probably need to pay an accountant to do this but some self-advocacy groups have managed to get local companies to help them for free. 25

4d Being a company or not The main reason for being a company is to protect members from having to pay if the selfadvocacy group had to close down and still owed money.

There is more information about this in the Extra Notes booklet.

Where to get more information Companies House can give you lots of information about setting up a company. There are also people who are experts at doing this and you could pay them to help.

Directors are the people in charge of a company and they have to keep good records of the money and write a report each year to tell people what the company has done. They also have to send a report to Companies House each year. There are different types of company. Most selfadvocacy groups who decide to be a company are limited by guarantee.


This is because: Companies limited by guarantee are designed for voluntary organisations that only use the money to do the work and do not make a profit. The way the company is set up gives everyone a say in what happens. Each member would only have to pay a small amount (usually ÂŁ1) if the company had to be closed down.

The business name The self-advocacy group would have to register their name and check that no-one else is already using it.

It is important to do this before you get the name printed on anything.

The name of the company would have to be on a sign outside the central office and on any papers or letters that are sent out.

It is also a good idea to check that the name is available for a website and to register this too. 27

Ou r Group

5 Paying Tax Key Points Most businesses have to pay Tax on money they earn, some things they buy and the profits they make. There are special rules that mean organisations like self-advocacy groups should not pay so much tax. The type and amount of tax an organisation has to pay depends on how it is set up and organised. It is important to tell the people who collect tax about your group or organisation as soon as possible and get advice about what to do. Group members need to make a decision about this The tax rules will depend on whether the group is a Club or Society, charity or company.

Where to get more information The charity commission, HM Revenue and Customs, Business Link, Companies House. Details at the end of this part.

Who to talk to about this Talk to an accountant who understands the rules about paying tax. 29

5 Paying Tax More Information 5a Introduction The rules about paying tax are very complicated and it is best to have an accountant to make sure everything is set up properly. This part will give you an idea of what needs to be done.

There is more information in the Extra Notes booklet.

If a self-advocacy group is a voluntary organisation or charity, the rules about paying tax will be different from other businesses.

There are 3 main types of taxes to think about: VAT (Value Added Tax) on things you buy. Income Tax on money that you earn. Corporation tax on profits that you make. The HM Revenue and Customs Department is in charge of tax. This is the new name for the HM Revenue and Customs and HM Customs and Excise. 30

Where to get more information At the end of this part there is information about how to contact them for advice. 5b VAT Whether a self-advocacy group decides to be a charity or not, it might need to register for VAT when the money paid to the group is more than ÂŁ60,000 in any year. This amount often changes in the Budget so it is important to check.

Group members need to make a decision about this If they are earning less than this, the self-advocacy group could choose to register for VAT if they want to. Being registered for VAT would mean that you could claim back some of the VAT you pay on things you buy for the group.

Some types of education and training organisations do not have to register for VAT.

If you are not registered as a charity with the Charity Commission, you will have to prove that you are doing charitable work.


5c Income Tax Charities do not pay tax on most of the money they get but there are forms you need to fill in each year to tell the HM Revenue and Customs Department about this. A charity must register with the charity commission before it can contact HM Revenue and Customs Charities and make sure they are registered for the special tax rules. Some voluntary organisations that are set up as companies do not have to pay tax and others do. It depends on the way they are organised and it is important to check this with the HM Revenue and Customs. The self-advocacy group will also have to collect tax and National Insurance from staff who they employ. This is taken out of their wages using the pay as you earn system (PAYE) and sent to the HM Revenue and Customs. 5d Other taxes There are lots of rules for other types of tax and organisations usually pay someone who understands these to do this work for them. It is important to get advice as soon as possible and tell the HM Revenue and Customs when an independent self-advocacy group is being set up. Their Business Support Teams give training, advice and support to people who are setting up new businesses. 32


Where to get more information

HM Revenue and Customs Department

0845 010 9000

Charity Commission

Business Link

0845 600 9006


Where to get more information

Revenue Charities

0845 3020 203

St John’s House. Merton Road Bootle. Merseyside L69 9BB

Companies House

029 2038 0801


6 The money needed to run an independent self-advocacy group Key Points The group will need to write a Business Plan including a budget that shows what it will cost to run the independent self-advocacy group or organisation for at least 3 years. Until the members decide what type of organisation they want to be, we can only give an example of what costs to think about. As an example, we have looked at what some groups already do and the costs they think are important.

Group members need to make a decision about this Who to employ Where to have the central office What equipment is needed for the office Information about money to employ people and supporters.


Where to get more information

Mencap ‘Making it Work’ guides

020 7454 0454

Who to talk to about this Talk to an accountant, other groups and other people who you might need to ask for advice in the first year. 36

6 The money needed to run an independent self-advocacy group More Information 6a Introduction This is just an example of the costs that a self-advocacy group might need to set up as a voluntary organisation and a Company limited by guarantee (see part 4). It is based on what some groups already do. When you write a business plan, you need to say what you think the self-advocacy organisation will cost for at least the first 3 years.

We have shown the costs you may need to think about. Costs for years 2 and 3 might cost more or less, depending on any changes. If the self-advocacy group is a charity or is not a company limited by guarantee, some of this information would be different.


6b Costs you need to think about to run a self-advocacy group Travel costs


People costs


Meeting costs


Office accommodation


The cost of running the office


Consultancy and support


Central business costs




People Costs This is about what it might cost to employ supporters for a self-advocacy group. It includes things like National Insurance, travel and expenses for the staff. The cost could be based on: A Director or Chief Executive earning £20,000 a year.

2 part time office assistants earning £12,000 each. Self-advocacy groups often want people with a learning difficulty to have these jobs so we have included the cost of supporters. There is more information about this in part 7. 38

There may be grants or funding to help pay people with a learning difficulty or their supporters. independent groups will need to find out about this. At the moment there is:

Access to Work which provides practical support to disabled people who want to work. New Deal which provides practical advice and support through Job Brokers in Job Centres. Disabled Person’s tax Credit which works through the tax system and means that disabled people get a guaranteed wage. Direct payments have been used to support someone to work in a self-advocacy group.

The cost of Meetings This will depend on the number of meetings held and where they are held, each year. Office accommodation This includes all the costs of renting a good sized office. The office would need to be somewhere the group chooses. As you will be a service and an employer the Disability Discrimination Act says that your office should be accessible for everyone. This includes doors and toilets being accessible. 39

The cost of running the office This is made up of all the things used in an office: post





heating and lighting

Advice, consultancy and support There will usually be more spent on this in the first year to pay people who can help the self-advocacy organisation set things up well:

an accountant to make sure that the group sets up ways to look after the money properly.

a solicitor for information and advice about renting the office.

other consultancy and advice while the group is being set up.

This also includes the cost of supporters for members at meetings but not support for people with a learning difficulty employed by the group.


Central business costs These are the costs of running any business and include things like: insurance bank charges and interest depreciation (the cost of something wearing out as it is used year after year)

6c What equipment costs to think about: Office Furniture & Equipment


Computer Equipment


Presentation Equipment




Specialised Equipment




6d Tax The costs above do not include tax, VAT or interest charged on any money the self-advocacy group has to borrow. These will depend on what type of organisation the group becomes.

There is more information about this in the Extra Notes booklet.


7 The people who could work in the self-advocacy office Key Points The self-advocacy group may want a Chief Executive or Director and other people to work in their office. A lot of groups would want these to be people with a learning difficulty. They may also need to have support.

The Self advocacy group would need to write job descriptions and think about all the skills people need to do the jobs.

There may be some grants to help pay some of the costs of employing disabled people.

Group members need to make a decision about this Who should work in the office? What sort of support will workers with a learning difficulty need? What skills do people need?


Where to get more information Information about employing people and their supporters:

Mencap ‘Making it Work’ guides.

020 7454 0454


7 The people who could work in the self advocacy group office More Information 7a Introduction The self-advocacy group may want to employ: a Chief Executive who is a person with a learning difficulty. people with a learning difficulty to work in the office. supporters or job coaches to help people with a learning difficulty working in the office. The self-advocacy group would need to write job descriptions, hold interviews and choose people. 7b Supporters or job coaches Group members need to make a decision about this These supporters will help people to learn the different jobs in the office. As people get more confident, they will need less support. The selfadvocacy group would need to decide the best way to employ the supporters: as contractors who only work when they are needed. 45

with short (six month or one year) contracts which can be changed if people need more or less support. for a set number of hours to support new people as others need less support. 7c Job descriptions You need job descriptions to make sure you get the right people with the right skills to do the work. These ideas are to start you thinking: Chief Executive You might feel it is important that the person: feels really strongly that people with a learning difficulty should be involved in planning every area of their lives. understands the way Local Authority, Health and Government departments work. knows about policies and laws and the way they can affect the lives of people with learning difficulties and can explain this to other people clearly. has experience of managing staff and volunteers. understands about managing money and budgets. has worked for an organisation or charity before. 46

Supporter or Job Coach Good support can help you learn new skills without taking over or making you feel stupid. supports you to know what is happening and explains this in ways you can understand. supports you to know what you need to be doing. asks you what support you want and understands that you might need different support at different times. understands that being a supporter or job coach is a really important job because it helps you become more independent.

7d Finding the money to employ people It is expensive to employ staff. As well as the cost of their wages, the self-advocacy group will have to pay National Insurance, travel and other expenses. One way of saving money would be to use grants from the Learning Skills Council, Access to Work, New Deal or Direct Payments. It is important to check what grants there are when a final business plan is written. If this means spending less money it needs to be put in the business plan. 47

The cost of providing hearing loop systems, lip speakers or equipment to help disabled people work in the office could also come from grants or Access to Work.


8 The planning that needs to be done before the launch of the self advocacy organisation Key Points This part will give you an idea of the things you need to do before launching a new self-advocacy group or independent organisation.

The group needs to sort out things like an office, staff, bank accounts, insurance and how it will manage the money.

People like a solicitor and accountant can help.

Group members need to make a decision about this Where should the office be? Who will work there? What experts are needed to help with things like the law and money? There is information that can help you in parts 4 and 5.


Where to get more information

The Law Society

0207 242 1222

The Institute of Chartered Accountants

0207 920 8100


8 The planning that needs to be done before the launch of your self-advocacy organisation More Information There are things that need to be organised and set up before a selfadvocacy group or independent organisation is set up. There is more information about some of these in the Extra Notes booklet.

8a Set up a central office

A self-advocacy group office must be somewhere that is easy to get to by public transport and has good access for everybody. A solicitor can help check Contracts and agreements about renting an office. The self-advocacy group would need to:

look for an office at least 3 months before the launch. make sure there are telephone lines.

sort out heating and lighting for the office. 51

get insurance for the equipment and the people who work there.

order equipment, furniture and stationery.

8b Register A self-advocacy group must register with HM Revenue and Customs and talk to an accountant about paying tax. There is more information about this in part 5. Depending on how it is going to be set up, the self-advocacy organisation might need to register with Companies House and the Charity Commission. There is more information about this in part 4.

8c Set up ways to keep track of the money The self-advocacy group must be able to show its funders how it spends the money it is paid. Often, the budget for the first year will have to show how much is needed and how it will be spent before funders will pay any money. Once this is done the group needs: an accountant to set up ways to keep track of the money.


to make sure they know when they have to show records of the money they have been given and spent.

to set up a payroll system to pay staff.

to open a bank account for the self-advocacy group.

to get things like claim and expense forms printed.

8d Choose people to be advisors and consultants It is important to get lots of advice and support from experts like a solicitor and accountant and from other groups and experts in self-advocacy.

8e Employ staff It takes time to employ people and there are laws about how to do this. The self-advocacy group will need to: decide how many people to employ.

write job descriptions and adverts. 53

write contracts for the work people will do.

find out if they need to set up a pension scheme.

find out about grants to help employ people.

interview staff.

see if staff need any training before they start work.

write a handbook to tell people about things like the rules for working for the self-advocacy group, how to claim expenses and what happens if things go wrong.


And finally

Good luck with starting your new group, society or business.


9 What the words mean Here is a list explaining some of the words we have used in this guide. They are in bold type on the pages. Audit Getting someone independent to check the records you keep about your organisation’s money. Accountant Someone who is trained to understand how to keep records about money and tax. budget A plan that says how much money is coming in and how much will be spent on different things. Budget The Government’s plans for how it is going to spend money. Business plan A plan which shows people what an organisation is going to do, how they will do it and how they will spend their money. Charity An organisation which doesn’t make any profits and is often set up to help people. Any extra money is used to do more work. Charity Commission The organisation that makes sure that charities work in the way they should. 57

Chief Executive Name sometimes given to the person in charge of an organisation. Club or Society A group of like-minded people who work together as an organisation. Company An organisation or group of people who set themselves up as a company to work together. Company limited by guarantee A way of setting up a company so there is a limit to how much members have to pay if it owes money and has to close down (usually ÂŁ1 each). Conflict of interest Being involved with different organisations that want different things and finding it difficult to do what is best for the organisations because of this. Constitution A set of rules agreed by the group about how the group should work. Consultant Someone who you ask for expert advice. Contract A written agreement about what a person or organisation will do.


Companies House The organisation that makes sure that companies work properly. Corporation Tax Tax that companies pay on the profits that they make. Depreciation The cost of something wearing out as it is used year after year. Director Someone who is in charge of an organisation. Elections Choosing people by voting for them. Governing document Papers which say what an organisation wants to do and why it has been set up. HM Revenue and Customs The Government which is in charge income, corporation tax and VAT. Independent Not linked to an organisation. Able to make their own decisions about something. Income Tax Tax you pay on money you earn. Job coach Someone who supports you to learn a job. 59

Job description Information about what skills and experience are needed for a job. Payroll system Ways of paying staff their wages and making sure that income tax and National Insurance is collected and paid to the Government. Self advocacy People speaking up for themselves. Solicitor Someone who is trained to understand the law. Tax Money paid when we earn wages or buy things. The Government use taxes to pay for things like schools, hospitals or social services. Trustees The people who have to make sure that a charity works properly and keeps to charity law. VAT Tax which is paid on many things that are bought or sold. Voluntary organisation An organisation that does not make any profits. Any extra money is used to do more work. Voluntary work Work you do not get paid for doing – you usually claim expenses. 60

‘Taking Control’ Extra Notes Booklet

The more complicated bits!

‘Taking Control’ Extra Notes Booklet

The more complicated bits!



About these notes


Section 1 Being a charity


Section 2 Auditing accounts


Section 3 Deciding whether to be a company or not


Section 4 Paying taxes


Section 5 Things to do before a launch


About these notes These notes give extra information to ‘Taking Control’ the Guide to Setting up and Running your own Self-Advocacy group, organisation or business.

We tried to make ‘Taking Control’ as easy to understand as possible, but the things that we could not make easy read without missing out important information are in these notes.

They contain the sort of information that self-advocacy group members might need supporters or experts like a solicitor or accountant to go through with them.


Section 1 Being a charity It is useful to be a charity because: Charities do not normally have to pay tax or stamp duty and gifts to charities are free of inheritance tax. Charities pay no more than 20% of normal business rates on offices they rent or lease. Charities can get special VAT treatment in some circumstances. Charities often find it easier to raise funds than non-charitable bodies. Charities can reassure the public that they are being monitored and advised by the Charity Commission.

The difficulties with being a charity are: A charity must have exclusively charitable purposes. All noncharitable activities would have to be stopped. The extent of political or campaigning activities are limited. Strict rules apply to trading. Trustees are not allowed to receive financial benefits from the charity which they manage unless it is specifically authorised by the governing document of the charity or by the Charity Commission. Trustees need to avoid any situation where charitable and personal interests conflict.


Charity law imposes rules about what financial reporting must be done and these vary with the size of the charity. To be a charity an organisation must have purposes which are exclusively charitable. A charity’s purposes are usually set out in its governing document.

Trustees The term Charity Trustee is defined as the people having the general control and management of the administration of a charity. All charities must have a clearly identifiable body of trustees, but they are often called different names, for example, Executive or Management Committee members, Board, Council of Management or Directors. Whatever the trustees are actually called, their responsibilities as trustees are the same. The duties and responsibilities of a charity trustee are wide ranging and need to be taken seriously. Anyone who wants to be a trustee needs to be prepared to give the necessary time and effort to understanding and carrying out those responsibilities. The law says that trustees should not benefit financially from being a trustee, unless they are given special permission to do this. Trustees must avoid being in a position where duties as a trustee conflict with their own personal interests. The Charities Act sets out which people are not allowed by law to be trustees. The Statement of Recommended Practice 2000 (SORP 2000), ‘Accounting and Reporting by Charities’ recommends how a charity should report annually on the money it gets and the work it does.


Section 2 Auditing accounts There are different rules depending on the type of organisation. If the constitution of a charity says the accounts need to be audited, this will have to be done by a registered auditor, regardless of the size of its gross income. All charities who are not companies (unincorporated) with a gross income or expenditure of between £10,000 and £250,000 must have an independent examiner’s report. This need not be from an accountant but the trustees are expected to choose someone suitable. The Charity Commission strongly recommend charities with a gross income of more than £100,000 use a qualified accountant. All charities with gross income or expenditure of more than £250,000 a year must be audited by a registered auditor. Charitable companies with gross income between £90,000 and £250,000 need a reporting accountants’ report if they want to be exempted from the statutory audit requirement. The company must also be able to qualify as a small company for the purposed of filing simple (abbreviated) accounts. If a company takes advantage of the audit exemption the directors must make a statement on the balance sheet saying that the company was entitled to this, that holders of at least 10% of the issued share capital have not asked for an audit and, acknowledging their responsibility for keeping proper records and preparing accounts that comply with the Companies Act. If a voluntary organisation is set up as a company it must have its financial statements audited if turnover exceeds £1million or total assets exceed £1.4 million.


Section 3 Deciding whether to be a company or not. One of the main benefits of setting up a company is that shareholder liability is limited to their paid up share capital or, in the case of a company limited by guarantee, by the amount guaranteed by the management board. (usually £1 per member). In the case of an independent self-advocacy group, this means that there would be a limit to the amount that members would have to pay from their own money if the group owed money and had to be closed down. The company is a separate legal entity and can own assets in its own right. Various pieces of paperwork have to be completed when a company is set up. A Memorandum of Association must be lodged with the Registrar of Companies when the company is formed. This sets out the identity of the company and its objectives and powers. The Articles of Association also has to be signed and filed with the Registrar of Companies when the company is being registered. The memorandum is quite a short document but the Articles of association are much more detailed and contain rules covering everything to do with the company and its shareholders. A company can be set up using services available from Companies House or a company set up service. The directors or management board are responsible for preparation of accounts in accordance with the Companies Act. The annual accounts must be approved by the Board and the balance sheet must be signed on their behalf by a director in office at the date of signature. The directors are responsible for the production of a directors’ report, keeping proper accounting records, for safeguarding the assets of the company and for proper approval and filing of the financial statements, directors’ report and any auditors’ report, within the time that they are told they have to do this. 7

All companies are required to send an annual return to the Registrar of Companies. This must be signed by a director or the company secretary within 28 days of the return date. If they do not do this in time, they could be fined unless they can show that they did everything they could to get this done. Directors are trusted (fiduciary duty) to act in the best interest of the company and its members. A company can be limited by shares or by guarantee. The company limited by guarantee is the type of company normally chosen by voluntary organisations and community groups because: It is designed for non-profit making organisations Its structure is essentially democratic Each members liability is limited to a nominal sum (usually no more than ÂŁ1) which he or she guarantees to pay if the company has debts on winding up. In the company limited by guarantee the incentive for people involved is not profit, but commitment to the objects of the organisation. Any profits made; they have to be reinvested in the company.

Business Name All businesses, whether incorporated or unincorporated, are required to check whether the name under which they intend to operate is already in use by another organisation. In the case of a company, the proposed name must be checked against the register of companies before application to the Registrar of Companies. There are a number of rules about naming a company so it is important that everything is checked out before stationery is printed or the name is used. The company must put a sign with its business name outside its registered office and include the company name and registration number on all business stationery. 8

Section 4 Paying taxes All charities and non-charities must register for VAT when the income from their taxable business supplies exceeds ÂŁ60,000. This limit is reviewed every year and generally increases following the Budget. Charities & non-charities can also voluntarily register for VAT purposes if the taxable supplies fall below ÂŁ60,000. Although charities may not be deemed to have any business activities under other laws, the definition of business for VAT purposes is governed by its own rules and regulations. So how does a charity decide whether its activities are business or nonbusiness? The normal rules are as follows: where the activity is concerned with the making of supplies for a fee, where the activity has a degree of frequency or scale, and where the activity is continued over a reasonable period of time. The status of the charity regarding VAT can be confirmed with Customs & Excise. There is no blanket exemption for charities from the VAT system. A registered charity will need to check with its Customs & Excise Office whether it has to pay VAT. If a charity is not registered for VAT it can still buy some supplies exempt from VAT if supplied to charities, for example, some advertising services. This needs to be confirmed with Customs & Excise. However, only charities that are registered for VAT can reclaim VAT that has been charged by suppliers, and even then there may be some restrictions on the amount they can reclaim. 9

If you are registered for VAT purposes and make standard rated (17.5%) or reduced rate (5%) supplies, you have to account to Customs & Excise for the tax due on these supplies. This is referred to as output tax. At predetermined intervals you pay to Customs & Excise the difference between your output tax and your input tax (VAT on purchases). If your input tax exceeds your output tax you can reclaim the difference from Customs & Excise. There is no difference for VAT between those charities registered with the Charity Commission and those that are not. However, unregistered charities claiming VAT relief may need to demonstrate that they have charitable status. This may be achieved from their written objects or by recognition of their charitable status by the HM Revenue and Customs. Further information is available from Customs & Excise Website or from the National Advice Service (Contact details are in part 5 of Taking Control).

Charities Most income received by charities is exempt from tax. Occasionally charities receive income that is not exempt or spend money in ways that are not charitable. In these, and in some other circumstances, the charity may be liable to tax. When this happens a charity is treated in exactly the same way as any other taxpayer and must account for the tax through the self-assessment system. The HM Revenue and Customs issue forms to complete returns to a random selection of charities each year and these must be completed and returned even if there is no tax to pay.


The HM Revenue and Customs have attempted to make these returns as simple as possible for charities by designing a special page for charities to complete. There will be very little on the main Self-Assessment return that the charity needs to complete. The charity pages for companies or trusts can be found on the HM Revenue and Customs Website ( If the charity is set up by Trust Deed, Will or Settlement then it is a trust for tax purposes. All other charities are treated as companies for tax purposes. The supplementary pages required to be completed can be ordered on 0845 9000 404 for trusts ( form SA907) and, 0845 300 6555 for companies (form CT600E). The forms must be returned by 31 January following the tax year to which it relates for trusts or within three months of issue, if this is the later. For other charities, forms must be returned by the latest of the following dates: 12 months after the return period, 12 months after the accounting date, 3 months after the notice to file. If the returns are returned late then penalties will be charged. There is a new HM Revenue and Customs Helpline number 0845 3020 203 which is available from 8.30am to 6pm Monday to Friday. The same number can also be used by charities for VAT queries. A charity is defined in the Taxes Act as ‘any body of persons or trust established (in the UK) for charitable purposes only’. Only charities which satisfy this definition and some certain other specified bodies can receive Gift Aid donations and Payroll Giving donations. In order that a charity can take advantage of Gift Aid and other giving schemes, and so that it can make claims for repayment of tax, it must notify IR Charities of its existence so that the appropriate records can be set up. 11

In England and Wales, the Charity Commission has responsibility for the regulation of charities that are required to be registered under the Charities Act 1993. If a body is required to register with them, application should be made to the before contacting HM Revenue and Customs Charities. The telephone number for the Charity Commission is 0870 333 0123 and their website address is The Charity Commission can also advise whether a body is required to register with them. A charity that has registered with the Charity Commission need only notify HM Revenue and Customs Charities of its charity registration number, full address including postcode and the date on which its accounting period ends. Some charities which are not required to register with the Charity Commission can write to HM Revenue and Customs Charities to check whether they are still eligible for charitable tax exemptions. The address for HM Revenue and Customs Charities is as follows: HM Revenue and Customs Charities St John’s House Merton Road Bootle Merseyside L69 9BB The HM Revenue and Customs has a duty to ensure that any tax repaid to charities is properly due and correctly calculated. The Audit Unit undertakes inspections to check that any claims charities make for repayment of tax are for correct amounts and are backed by clear audit trails. Most inspections are routine. The timing and frequency at which charities are inspected depends upon the size of the claim, the results of any previous inspection and, any other information.


Tax for Companies not treated as Charities UK Companies are subject to corporation tax on taxable income or profits made in each accounting period as well as any net capital gains. The company is also responsible for payment of employers national insurance contributions on all wages and salaries paid in each tax month as well as for deduction from employees of income tax and employees national insurance. The company payroll will need to operate under the HM Revenue and Customs’s pay as you earn (PAYE) system and comply with its rules. It is the responsibility of the Director’s of the company to let the HM Revenue and Customs know that the Company exists and that it is liable to tax. The word company is also used to include the following: Members Clubs, Trade associations, Housing associations, Groups of individuals carrying on a business but not as a partnership. For Corporation Tax, companies have to work out their own tax liability, pay their tax without prior assessment by the HM Revenue and Customs and, are liable to penalties if they do not deliver a return by the statutory filing date, normally 12 months after the end of the accounting period. Corporation Tax is due for Accounting Periods which are normally 12 months long. Accounting periods can, in some circumstances be shorter than 12 months but never longer. The HM Revenue and Customs gives help and advice through their national Helplines, and locally based Business Support Teams for people starting in business as a company. Business Support Teams offer workshops and presentations on a wide range of tax and national insurance issues affecting employers and businesses. 13

Small new employers can take advantage of an educational visit of up to one day to go through payroll responsibilities and time-scales. It is possible to find out more about these services through the New Enterprise Support Initiative or Employers Helplines, the local HM Revenue and Customs Enquiry Centre, and local advertising campaigns. All new companies need to be registered at Companies House and, they can be contacted by visiting their website at or by telephoning their Central Enquiry number on 029 2038 0801. If the HM Revenue and Customs is not informed that a new company exists (even though it is already kept informed by Companies House) and that it is liable to tax within 12 months of the end of its accounting period, the company may be liable to a penalty. When Companies House informs the HM Revenue and Customs that a company exists, a computer record is set up and a form CT41G is sent to your company address. More information on keeping records is available in the HM Revenue and Customs book, CTSA/BK2 ‘ A Guide to Corporation Tax Self Assessment for Tax Practitioners and HM Revenue and Customs Staff’. This book can be viewed on the following website


Section 5 Things to do before the launch of an independent self-advocacy organisation The office The sample budget would need to be prepared. This may vary, depending on how the office is staffed and organised. The rent due per square foot will need to be affordable and it is important to find out about the ‘extras’ that are included in the rent and service charge. Some landlords pay for items such as rates, building insurance, building maintenance, business rates, heating, lighting, alarm maintenance, cleaning, and reception services. It is important to check what is included in the rent and service charge carefully to ensure that the group has enough money for payment to the landlord plus all of the ‘extras’ not covered by the landlord. Once an office has been found, a lease agreement will need to be drawn up to record what rent and service charges have been agreed. This needs to be prepared and/or reviewed by a lawyer before it is signed on behalf of the self-advocacy organisation. The local council can let you know the cost of business rates per square metre. It is usual for local councils to offer registered charities an 80% reduction in business rates but this will need to be checked. It will be important to check availability of telephone lines and to check prices with all of the suppliers that service the chosen office to get the best possible prices. Think about how many lines are required and whether broadband connections will be needed. Even if the landlord is paying for buildings insurance, further cover will be required at least for contents and employers liability insurance. There are many insurance brokers listed in Yellow Pages and, it is good practice to ‘shop around’ for the best value. 15

Once you know what furniture and equipment you need, it may need to be ordered well before the move in date to make sure that it is available on time. You might need to hire the services of an IT expert in order to work out how many computers will be required, what computer programs are needed and whether the computers need to be networked. It will also be necessary to check whether a telephone system is already available in the new premises and whether new telephone handsets are required. A communications ‘expert’ should be able to help with the choice of telephone system and handsets that best suit the needs of the people working in the office.

Setting up a company If the self-advocacy group decides to set itself up as a limited company then, this can be achieved by using the services of a lawyer, the services of a company formation business or directly by contacting companies house (see section 4 of the Guide).

Registering with the Charity Commission, the HM Revenue and Customs and Customs & Excise The self-advocacy organisation may need to register with the any or all of the following depending upon how it is organised (see section 4 of the Guide):

Charity Commission HM Revenue and Customs Customs and Excise


Setting up Accounting Systems and Controls The self-advocacy group may need to operate as a business, accounting to funders for the money it spends. The budget required to run the Charity for the first year will need to be worked out as well as the equipment required to operate the group’s office. The budget may need to be approved by the funders before any money is provided. Once the budget is approved a record of the actual money spent will need to be kept on an accounting system. The services of an accountant will be required in order to ensure that the financial procedures and controls are properly set up. An accounting software package will need to be properly set up so records can be maintained on a computer. Accounts will need to be prepared at the end of each accounting period and taxes correctly paid and administered. A payroll package may also be required so that employees can be paid or a payroll bureau could be used for this. (Software like TAS or Sage are commonly used).

Advisors and Consultants Advice and support from experts is most likely to be required in order to set up and run an independent self-advocacy organisation. The need for a lawyer and an accountant has already been discussed and the group might also need an auditor.

Employing staff Time needs to be allowed in a plan to make sure there is sufficient time to find and recruit the right people to work for the self-advocacy group. Care needs to be taken in preparation of job descriptions and adverts so that employment law requirements are fully met. 17

If more than five employees are recruited, a stakeholder pension scheme must be set up and administered. Contracts of employment will need to be drawn up and signed by the new employees. If training is required prior to a launch then this will need to be allowed for in a pre-launch plan. If grants or other help with employing staff and supporters can be obtained, this needs to ready in time for the launch of the independent business. Personnel procedures will need to be decided upon and set up. The preparation of an employee handbook could be useful in order to document company rules on say, expenses and disciplinary procedures.


Taking Control - Book and Notes  

A guide to setting up and running your own Self-Advocacy Group, organisation or business

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