ECF Accounting

[E Michael White]

BTW Seems to me those who set up the John Robinson trust actually did the right thing - at least its protected and one cannot envisage any circumstance where several K would get paid out without proper authorisation.

Fron that point of view yes. It clearly slowed up in some ECF officials minds the need to progress on the charity status side. It has caused a position to be taken which does not make full use of potential charity status.

[Alex McFarlane]

Darwin give the ECF £13,000 plus VAT for the British Champs. The VAT must be ignored because it is simply passed to HMRC.
CJ allegedly says that the ECF is due £3,000 from him for the British Champs. We don't know if this is true or how this debt cam to be.
CJ has arraneged to distribute the sponsorship money.
CJ wants to offset the amount due to the ECF against the sponsorship money and invoices the ECF for £12,600 WITH NO VAT.

Therefore, the ECF have received a net £400 (£13,000 - £12,600) of the £3,000 CJ allegedly owes them.

Sean,

You have just stolen a half of a question I was going to pose at the Council Meeting. The other half was going to be ...
De Mooi has registered himself as a company. Has he reclaimed the VAT through that company on the Darwin money and the hotel bill?

It is just possible that De Mooi could have made a profit out of 'his sponsorship' of the British.

The silence from ECF office bearers is deafening. I'm still waiting on Andrew Farthing telling me when/if I will get an unabridged copy of the accounts for the British.

[Roger de Coverly]

De Mooi has registered himself as a company. Has he reclaimed the VAT through that company on the Darwin money and the hotel bill?

Can you not play " pass the parcel" as regards VAT? So the ECF receives £ 15,600 from Darwin and issues Darwin a VAT invoice. Darwin then can offset this against their VAT bill. The ECF passes on the full £ 15,600 to De Mooi's company, assuming it to be registered for VAT. The ECF doesn't then have a VAT liability, provided it gets the right paperwork from CJ's company. CJ's company is then liable for VAT, but if it spends the lot on hotels and other VAT included services, then it can offset the tax due. If at the same time, the ECF receives £ 3,000 from De Mooi or his Company, then the ECF again has a VAT charge. If the amount comes from De Mooi's company, then the company can offset the implied VAT against its own VAT bill by virtue of handing it on to the ECF.

I think that's all quite legal, if against the ECF's governance and reporting principles. Although owners of personal service companies treat assets retained in them as personal wealth, there are legally separate entities.

It's not unknown for personal service companies to be used as vehicles for sponsorship. From time to time, 4NCL teams are sponsored in this manner. Provided you can get HMRC to accept chess sponsorship or patronage as a valid expense, you can get some tax and VAT savings over the alternative of using your wealth or post tax income.

[Carl Hibbard]

I'm still waiting on Andrew Farthing telling me when/if I will get an unabridged copy of the accounts for the British.

Seems rather unlikely

[John Townsend]

What does "unabridged" mean in this context? Why can't Alex have a copy?

[Sean Hewitt]

Can you not play " pass the parcel" as regards VAT? So the ECF receives £ 15,600 from Darwin and issues Darwin a VAT invoice. Darwin then can offset this against their VAT bill. The ECF passes on the full £ 15,600 to De Mooi's company, assuming it to be registered for VAT. The ECF doesn't then have a VAT liability, provided it gets the right paperwork from CJ's company. CJ's company is then liable for VAT, but if it spends the lot on hotels and other VAT included services, then it can offset the tax due. If at the same time, the ECF receives £ 3,000 from De Mooi or his Company, then the ECF again has a VAT charge. If the amount comes from De Mooi's company, then the company can offset the implied VAT against its own VAT bill by virtue of handing it on to the ECF.

That's correct in principle. However, the problem is that, as Mike Truran states in his report, the invoice received from CJ is not a VAT invoice. That being so the music has stopped and the ECF are left with the VAT 'parcel'. If CJ is able to issue the ECF with a VAT invoice (and I have no idea if he has a VAT registered vehicle or not) then all well and good but if that were the intention it should have happened by now.

[John McKenna]

In the copy of the complete ECF accounts for 2010/11 that I saw here earlier this year the following breakdown of the British Championships 2011, Sheffield, was given -

INCOME
--------
33,622 Entry fees
1,391 Sponsors
14,250 JR Trust
2,448 Other
--------
51,711
-------

EXPEND
--------
28,427 Prizes etc.
12,025 Controllers
1,870 Presentation & Comms
500 ECF office
4,858 Other
--------
47,680
--------
4,031 INCOME - EXPEND (PROFIT)
--------

Given what has been revealed so far about income from sponsorship and expenditure on prizes, etc. (and bills paid? - see the ubiquitous 'other' below, this time with a figure of 13,576) if the accounts were submitted to Companies Hse. with the above figures aren't they probably in error?

For example (posted Wed. 21/3/2012 15:54 by Roger de Coverly) -

Extracted from the detail budget spreadsheet, these are the outruns for the 2011 British

GROSS INCOME
Entry fees 33,718
Sponsorship 8,233
John Robinson Trust / PIF 12,000
John Robinson Trust - Junior Coaching 2,500
Concessions 1,000
Other income 1,139
English Championship 2,000
Bequest / Donations 0
Accomodation 200
Advertising 0
60,791

GROSS EXPENDITURE
Prizes and grants 30,086
Appearance Fees 0
Controllers costs 7,971
Bulletins 1,050
Presentation and commentary 2,200
Junior Coaching 0
Entry form printing and distribution 1,445
Equipment
Office Costs 500
Other 13,576
Accomodation 0
Venue 3,346
60,175

No amount is shown for VAT, so presumably these are net of VAT. Whether this explains why the sponsorship income is not the headline figure, I wouldn't know. I would guess that "Other" is the expenditure, either wholly or in part on "conditions" for titled players.

[Roger de Coverly]

In the copy of the complete ECF accounts for 2010/11 that I saw here earlier this year the following breakdown of the British Championships 2011, Sheffield,

I think you misread the venue. The ECF financial year runs from 1st May to 30th April, so what you saw were the figures for the Canterbury 2010 event which generated a surplus of around £ 4,000. The 2010-11 accounts should have been signed off at the 2011 AGM, but contained a number of oddities, so were deferred.

We are only seeing the Sheffield figures for the first time as part of the papers for the Finance meeting. As mentioned earlier, the reason for the sponsorship income not being the headline figure is unexplained. Personally I dislike accounts presented net of VAT, it just means that you cannot trace headline amounts or see just how much you are paying in tax.

[John Philpott]

Roger De Coverly wrote

Personally I dislike accounts presented net of VAT, it just means that you cannot trace headline amounts or see just how much you are paying in tax.

Nevertheless, as a result of SSAP 5, that is the approach that has been mandatory since 1974, and which even predates my joining the accountancy profession.

[Roger de Coverly]

Nevertheless, as a result of SSAP 5, that is the approach that has been mandatory since 1974, and which even predates my joining the accountancy profession.

That may well be true, but it doesn't mean that management accounts or budget information has to follow suit unless the intention is to hide information from those who would otherwise ask questions about it.

So the question is

Why does the Budget spreadsheet not record the amount of the Darwin sponsorship, either as the Gross Amount received by the ECF being £ 15,600 or the amount net of VAT being £ 13,000?

[John Philpott]

Roger de Coverly wrote

That may well be true, but it doesn't mean that management accounts or budget information has to follow suit unless the intention is to hide information from those who would otherwise ask questions about it.

An absolutely ridicuolous comment.

[Alex McFarlane]

Seems rather unlikely

This may be true but as a Manager of the event I should quite clearly be given a full copy of the accounts before the figures are lumped together under various headings. Neither David nor I accept that, as the accounts appear to stand, a profit of less than £1000 was made at Sheffield.

At the very least I should be given an explanation of why I am not entitled to them. David Welch is also querying the published figures.

Jack, as a non-exec Director can you please investigate this on my behalf? Thanks.

Can any member of the Board explain why neither David nor I have not been given a copy?

[Roger de Coverly]

An absolutely ridicuolous comment.

Not in my experience.

Anyway, why doesn't the budget show gross figures and the outrun show the full amount of Darwin sponsorship?

Particularly for the many non accountants, it would be a far less confusing presentation.

[Roger de Coverly]

This may be true but as a Manager of the event I should quite clearly be given a full copy of the accounts before the figures are lumped together under various headings. Neither David nor I accept that, as the accounts appear to stand, a profit of less than £1000 was made at Sheffield.

What are the issues?

I suppose
(a) how the balance of the Darwin sponsorship is reported
(b) whether there was additional patronage or sponsorship from CJ, CJ's company, the simul tour or anyone else
(c) what the rather large "other" figure consists of
(d) whether there's VAT which has been paid which could or should have been recovered.

What sort of profit would the managers have expected? Is it just an additional VAT recovery of perhaps £2,000 to £ 2,500, or should, given the numbers, the event have been more profitable for the ECF.

[JustinHorton]

I was wondering whether CJ has been asked for a breakdown of the "sponsorship expenses paid directly by him" for which "no documentation was provided".