£20,500 for the 2011 British Championships but whose money?

[John McKenna]

The pesident of the ECF was directly involved, with others, in raising £7,500 from various events and £13,000 sponsorship from one source. The entire sum was paid into the ECF's bank a/c but who wrote the cheques? That should be easy to answer if those in authority are open and transparent.
The president then spent a sum of money supporting the event as he alone saw fit - unless he agreed it with other officals? He subsequently, personally, invoiced the ECF for £12,600. That begs the question in the title.

[Roger de Coverly]

The pesident of the ECF was directly involved, with others, in raising £7,500 from various events and £13,000 sponsorship from one source. The entire sum was paid into the ECF's bank a/c but who wrote the cheques?

I don't know about the £ 7,500 but the £13,000 is well documented admittedly unofficially.

The main point is that it was £ 15,600 in cash terms, the extra 20% being to cover the ECF's potential VAT liability. The payment was made by Darwin Strategic, who were named as sponsors. From this CJ took £ 12,600 leaving £ 3,000 as a personal contribution to the finances of the British. Presumably this is included in the £ 7,500 in some way or other, but the VAT liability had to be paid for somewhere as well.

http://stevegiddinschessblog.wordpress. ... -hercules/

[John McKenna]

My point is - if the president signed cheques amounting to £7,500 (being monies raised directly through him) payable to the ECF but the £13,000 (plus £2,500 VAT to be paid to HMRC) of sponsorship money was signed by the sponsors as payable directly to the ECF then in my book that makes the sponsorship money the ECF's, whereas the £7,500 can in some sense be regarded as the president's money that he has lodged with the ECF for whatever reasons.
If the above is the case and the president then spent £12,600, personally, - i.e. without the agreement of other ECF officials - on supporting the event he should have only been reimbursed up to a maximum of £7,500. If he wanted the balance of £5,100 he should have had the written agreement of the other ECF officials who were empowered to spend the sponsorship money. If not the balance should have not been paid on his personal authority, unless of course it is within the president's authority to spend the ECF's money as he alone sees fit.

[Roger de Coverly]

If the above is the case and the president then spent £12,600, personally, - i.e. without the agreement of other ECF officials - on supporting the event he should have only been reimbursed up to a maximum of £7,500..

You need to read the sequence of events as detailed in the Gidders blog.

The amount of £ 12,600 was in the President's hands by this time last year, well in advance, I presume, of any need to spend it. As regards the £ 7,500, at least some of it was never a cheque in his own right, rather being an offset against the £ 15,600 received from Darwin.

As indicated on the Finance Council thread, the President was acting as a payment agent for the ECF in setting fees and conditions for players. This was irregular both by past precedent and what the ECF internal rules say is supposed to happen.

In other thread

I don't see this going anywhere. From my point of view CJ seems to have acted as the ECF's agent in organising the championship sponsorship. Wrongly and in breach of good governance. But we have John Philpott's statement that it is inconceivable CJ profited personally, and the fact that many GMs participation in the strongest recent championship. What is left to discuss?

This is what was claimed in July

http://www.ecforum.org.uk/viewtopic.php ... &start=159

The British Championships this year received 2 donations - one of £250 from a private benefactor and one of £16585 from me. In all honesty, I won't be contributing any more personal funds to chess as I can't afford it but I'm sure everyone will understand that where I choose to spend my own money should remain confidential.

People starting asking questions because the amounts quoted seem to change with every statement. You may be able to square the circle by regarding some of CJ's donation as not going to the ECF, but in supporting GMs personally. There's no donation income of £ 16,585 anywhere to be seen in the ECF Accounts.

The Streatham blog were regular commentators as it became apparent that all was not well with the financial reporting of Sheffield 2011
http://streathambrixtonchess.blogspot.c ... sness.html
http://streathambrixtonchess.blogspot.c ... efore.html
http://streathambrixtonchess.blogspot.c ... rs-ii.html

This thread eventually moves on to financial matters

http://www.ecforum.org.uk/viewtopic.php?f=25&t=3886

[JustinHorton]

As indicated on the Finance Council thread, the President was acting as a payment agent for the ECF in setting fees and conditions for players. This was irregular both by past precedent and what the ECF internal rules say is supposed to happen.

This has probably already been discussed somewhere, but if so I've missed it. Where does it say what is supposed to happen?

[Roger de Coverly]

This has probably already been discussed somewhere, but if so I've missed it. Where does it say what is supposed to happen?

I think this is a relevant document
http://www.englishchess.org.uk/wp-conte ... w-No-4.doc

from which

Funding by a sponsor must only be spent for the purposes agreed with the sponsor and an analysis of how the sponsorship money has been spent must be provided to the sponsor, the Director of Finance and the Chairman of the Finance Committee.

Also

7. Financial transactions

All financial transactions must be dealt with through an approved ECF bank account and must be effected on a gross (not net) basis.

[JustinHorton]

Thanks. So if I understand it, if we're paying a fee to Mr G. Randmaster IGM to play in our tournament, that has to be paid through an ECF account, and hence be traceable? You can't just pay a load of money to Mr A. C. Owboy and he just whops a few crisp ones off the roll when he needs to?

[John McKenna]

There must be reasons why the ECF was used to process the sum of £20,500 in the first place. It could have all simply been received and distributed by the president in a private capacity - since he was instrumental in raising it - and seems to have claimed therefore that it was his donation rather than monies passed through him acting as a kind of agent for the ECF.
Anyway, once the money was in the ECF's bank a/c you would hope that others would assume some responsibility for it and follow procedures.

[Roger de Coverly]

There must be reasons why the ECF was used to process the sum of £20,500 in the first place.

Darwin insisted on paying through the ECF. It could just have been VAT, since if they paid the ECF £15,600, they could reclaim £ 2,600 of that against their VAT bill. The then managers of the British have commented in marginally more detail on Darwin's motives. Darwin too have auditors and governance requirements, perhaps questions would have been asked if the money went directly to CJ.

As regards other funds, the money raised for the British wasn't just to pay for Grandmasters. There was also a wish expressed by the President to cut junior entry fees and increase prizes. Finance for this would have to go through the general Congress account.

[Roger de Coverly]

Thanks. So if I understand it, if we're paying a fee to Mr G. Randmaster IGM to play in our tournament, that has to be paid through an ECF account, and hence be traceable? You can't just pay a load of money to Mr A. C. Owboy and he just whops a few crisp ones off the roll when he needs to?

It is, up to a point, a concession that sporting and cultural events are even allowed to pay participants gross of tax. So presumably the ECF and other bodies running Congresses have to keep records in case HMRC should come asking questions. In some respects, it protects the professional players as well. If their earnings are investigated and they don't have paperwork, HMRC could try to impose tax on a guess of how much they won or were paid as conditions.

[JustinHorton]

There's also another way to look at it, and that's to draw comparison with the CAS business. In that instance the ECF turned itself into the private vehicle of Mr Kasparov and Mr Short, carrying out their private business without reference to the ECF membership. In this instance the British Championship became the private vehicle of Mr de Mooi, being turned over to him without reference either to the ECF membership or to its own rules.

It's not just a question of an iffy invoice or some bad decisions: it's about what and who the ECF is for.

[Paul Buswell]

It is, up to a point, a concession that sporting and cultural events are even allowed to pay participants gross of tax. So presumably the ECF and other bodies running Congresses have to keep records in case HMRC should come asking questions.

I'm going back 20-odd years now but when I was Treasurer of the Hasting Congress the tax régime for UK-domiciled professional players was that they were paid gross but a return of the amounts paid had to be made to HMRC - there was a particular HMRC section that dealt with that.

PB

[JustinHorton]

It is, up to a point, a concession that sporting and cultural events are even allowed to pay participants gross of tax. So presumably the ECF and other bodies running Congresses have to keep records in case HMRC should come asking questions. In some respects, it protects the professional players as well. If their earnings are investigated and they don't have paperwork, HMRC could try to impose tax on a guess of how much they won or were paid as conditions.

Which when I think about it, raises a couple of other questions.

One is - if payments to players were made via a bank account, even though that be Mr de Mooi's own, a record would be available of them (and an aggregation of their total could be made). Is it possible to conclude therefore that payments were made unrecorded in cash? Do the ECF know whether this was the case?

A second is - would you not expect a longstanding and presumably self-employed media professional, used to receiving payments from different sources, to know that there were potentially issues with VAT on invoices and with cash payments?

[Roger de Coverly]

A second is - would you not expect a longstanding and presumably self-employed media professional, used to receiving payments from different sources, to know that there were potentially issues with VAT on invoices and with cash payments?

It's only the British Championships and any other events directly run by the ECF that incur VAT on entry fees and sponsorship income. He may just not have been aware or made aware that VAT would apply.

Even the CEO initially overlooked that if you have to replace a VAT free government grant with money from players, then you need to raise more than you lose because of VAT. Provided it could be done in a manner not open to a tax evasion challenge, it would be more effective taxation wise for the ECF not to run the British Championships.

[Roger de Coverly]

I'm going back 20-odd years now but when I was Treasurer of the Hasting Congress the tax régime for UK-domiciled professional players was that they were paid gross but a return of the amounts paid had to be made to HMRC - there was a particular HMRC section that dealt with that.

The regime for non resident players is that they can be paid gross as well, subject to an amounts limit?
I vaguely recall a comment about Joe Gallagher, when he won in 2001, that he wouldn't see all the prize money until he reclaimed it, if he could, in his Swiss tax return.