AZIZFOUNDATION BUILDING COMMUNITIES TOGETHER The Aziz Foundation Annual Report and Financial Statements For the year ended 31 March 2023 Charity Regislralion Number 1169558 The Aziz F￿n￿OI10n I CONTENTS Report5 Reference ond administration information Truslees, report Independent ouditor's reporl 10 Financial statements statement of financial activities Balance sheet stalement of cash flows Principal accounting policies Noles lo the financial stolements 15 19 Azo FOundalK￿ I I REFERENCE AND ADMINISTRATION INFORMATION Board of Truslees Asrf Haroon Aziz (Chairl Hussein Haroon Aziz Rahima Aziz Talat Hobib Malik Principol office 16 Babmaes Street London SWIY 6HD Charily registralion number 1169558 Auditor Buzzacoll LLP 130 Wood Streel London EC2V 6DL Banker5 Barclays Bank I Churchill Ploce Canory Whorf London E145HP The Azii Foundolion12 Tru$lee$' report for the year to 31 March 2023 TRUSTEES, REPORT The Trustee5 presenl their slalutory report, togelher with the financial 5tatemenls of The Aziz Foundation. for Ihe year to 31 March 2023. Governance and Management Constitution The Azz Foundotion Ithe"Foundation"I commenced its operalions on 14 Augusl 2015 following the adoption of its conslilulion and was regislered as a Charitable Incorporated Organisation ICIOI wth the Chorify Commission on 10 October 2016. charity registration number 1169558. Board of Trustees As al 31 March 2023, the Fovndolion has four Trustees who have served Ihroughout the period covered in this report. They are named in the reference and administrative informolion on page 2. The constitution requires a minimum of three Trustees to be active during each reporting year. The Trustee5 do nol receive ony remuneration for their work as Trustees. New Trustees may be appoinled by the Board of Trustees. Proposed new Truslees would be required lo meet the exi51ing Board, and if opproved, would be provided with The Aziz Foundation constitution and brought up fo dale on Ihe Foundation's grant making processes, annual reportlsl, relevant Charity Commission policies and charity law. The Trustees are responsible for overall strategy ond specific time-sensisive priorities across the Foundalion's grant making work. They receive updates on finances and performance, as well os informalion on the impact of major grants. They ore also provided with updates on charity low and matters relating lo the adminislration of the Foundation. The Trustees are responsible for preparing Ihe Trustees, report ond financial statemenls, which must comply wilh statutory reqvirement5 and Ihe Foundalion's governing documenl. The Trustees consider that they comprise Ihe key management of the charity in charge of direcling and controlling. running and operating Ihe charity on a day-t doy bosis. The Trustees maintain the Foundation's rec(xds and information systems and manage the financial affairs of the Foundation. They are responsible for the safeguarding of the Foundation's assets and for taking reasonable Steps for the detection and prevention of fraud and other irregularities. The Founuulion13 Trvstees, report for the year to 31 March 2023 Governance and Management Iconlinuedl Management The Aziz Foundation deliversa dynamic progromme of philanthropicwork that awards scholarships, occasional grants and sponsors internships. The implemenlolion of the F(wndation'5 work progromme is delegaled to the staff who work closely with the Chair of Trustees. The staff are responsible for delivering the Fovndation's slrolegic objectives and priorities, implemenling its work programmes, and for Ihe monitoring and managemenl of grants and awords. Policies and processes for internal organisational development and exlerr)al granl making hove been set up, and all staff have been Irained in these policies. The bulk of the work is the management of the Masters Scholarships programme and the inlernships scheme. Three Progromme managers, whowork closely as a team and are in regvlor communicolion with Ihe Choir of Ihe Trustee5, carry this out. Since January 2023. the Programme Managers hove been supported byo Communications Manager ond an Internships Monager. Related parties During the yeor, the Foundolion received donations. both in the form of cash and in- kind support. from Miflats Basildon, Miflats Croydon, Coventry House, Croydon Investment, Basildon Properties, Bracknell Properties ond Trocadero (London). Risk Management Through formol governance policies and procedures. corefully moniloring programmes and ensuring that controls exist over key financial systems. Ihe Foundotion has established effective ways to mitigate and monage risk5 to ils work. Further, afler examining operational risks faced by Ihe Foundation at different levels of governance ond manogement, measures, procedures and checks have been put in place lo ensure Ihat grant moking and scholarships are monitored os necessary. For example, before grants are awarded the Foundolion will carry out detailed due diligence on applicanl organisalions and their projecls, including speaking to ony current funders of the opplicants. Once gronts are awarded, where possible the Foundation slaff visit grantees, premises. projects and evenls lo inspect the work Ihal the Foundalion has awarded granls towards. Also, prior to making the final grant award. the Foundation requests progress reports from the grantees. Similarly, before awording o scholarship, the Foundation's staff conduct dve diligence on applicants including reviewing evidence of Iheir student debt and qualification5 as well a5 inleTviewing them ond obtaining references. After a scholarship is awarded, recipients are expected to submit reports from their university confirming their progres5 on Iheir course. The Aiz FoundcJlion 14 Truslees, report for the year to 31 March 2023 Governance and Management Icontinuedl Risk Management Icontinuedl Any risk around internships is managed through scrvliny of the host organisalion, interviewlsl wilh prospeclive interns and obtaining references for the interns. Host organisations also submit regular reports on the interns and the Foundation's stoff will meel separalely wilh the intern lo discuss their experiences during the internship. The Trustees have examined the risks faced by the Foundotion and are salisfied that syslems are In place to manage and miligate exposure to those risks. statement of Trustees, Responsibilities Th& Trust&es are responsible f(J preparing Ihe Tru5tees' report and financial slatements in accordance with applicable law and United Kingdom Accounling Standards Iunited Kingdom Generally Accepted Accounting Praclicel. The law applicable to charities in England and Wales requires the Trustees to prepare financial slatements for each financial year which give a true and foir view of the state of affairs of the charity and of the income and expenditure of Ihe chority for thot year. In preparing Ihese financiol stalements, the Trustees are required to.. selecl suitable accounting policies ond then apply Ihem consistently; observe established meth23 were £1.748.22212022.. £1.154.6641. Additionally. Rahimo Aiz woi aworded o discretionary tvition fèes scholarship in financiol yèar 2022-23 for on omount ol £nil12022- £9.2501. She wos not in any way involved in this decision or award. The Azr£ ￿n￿alKIn 122 AZIZFOUNDATION BUILDING COMMUNITIES TOGETHER The Aziz Foundation Annual Report and Financial Statements For the year ended 31 March 2023 Charity Regislralion Number 1169558 The Aziz F￿n￿OI10n I CONTENTS Report5 Reference ond administration information Truslees, report Independent ouditor's reporl 10 Financial statements statement of financial activities Balance sheet stalement of cash flows Principal accounting policies Noles lo the financial stolements 15 19 Azo FOundalK￿ I I REFERENCE AND ADMINISTRATION INFORMATION Board of Truslees Asrf Haroon Aziz (Chairl Hussein Haroon Aziz Rahima Aziz Talat Hobib Malik Principol office 16 Babmaes Street London SWIY 6HD Charily registralion number 1169558 Auditor Buzzacoll LLP 130 Wood Streel London EC2V 6DL Banker5 Barclays Bank I Churchill Ploce Canory Whorf London E145HP The Azii Foundolion12 Tru$lee$' report for the year to 31 March 2023 TRUSTEES, REPORT The Trustee5 presenl their slalutory report, togelher with the financial 5tatemenls of The Aziz Foundation. for Ihe year to 31 March 2023. Governance and Management Constitution The Azz Foundotion Ithe"Foundation"I commenced its operalions on 14 Augusl 2015 following the adoption of its conslilulion and was regislered as a Charitable Incorporated Organisation ICIOI wth the Chorify Commission on 10 October 2016. charity registration number 1169558. Board of Trustees As al 31 March 2023, the Fovndolion has four Trustees who have served Ihroughout the period covered in this report. They are named in the reference and administrative informolion on page 2. The constitution requires a minimum of three Trustees to be active during each reporting year. The Trustee5 do nol receive ony remuneration for their work as Trustees. New Trustees may be appoinled by the Board of Trustees. Proposed new Truslees would be required lo meet the exi51ing Board, and if opproved, would be provided with The Aziz Foundation constitution and brought up fo dale on Ihe Foundation's grant making processes, annual reportlsl, relevant Charity Commission policies and charity law. The Trustees are responsible for overall strategy ond specific time-sensisive priorities across the Foundalion's grant making work. They receive updates on finances and performance, as well os informalion on the impact of major grants. They ore also provided with updates on charity low and matters relating lo the adminislration of the Foundation. The Trustees are responsible for preparing Ihe Trustees, report ond financial statemenls, which must comply wilh statutory reqvirement5 and Ihe Foundalion's governing documenl. The Trustees consider that they comprise Ihe key management of the charity in charge of direcling and controlling. running and operating Ihe charity on a day-t doy bosis. The Trustees maintain the Foundation's rec(xds and information systems and manage the financial affairs of the Foundation. They are responsible for the safeguarding of the Foundation's assets and for taking reasonable Steps for the detection and prevention of fraud and other irregularities. The Founuulion13 Trvstees, report for the year to 31 March 2023 Governance and Management Iconlinuedl Management The Aziz Foundation deliversa dynamic progromme of philanthropicwork that awards scholarships, occasional grants and sponsors internships. The implemenlolion of the F(wndation'5 work progromme is delegaled to the staff who work closely with the Chair of Trustees. The staff are responsible for delivering the Fovndation's slrolegic objectives and priorities, implemenling its work programmes, and for Ihe monitoring and managemenl of grants and awords. Policies and processes for internal organisational development and exlerr)al granl making hove been set up, and all staff have been Irained in these policies. The bulk of the work is the management of the Masters Scholarships programme and the inlernships scheme. Three Progromme managers, whowork closely as a team and are in regvlor communicolion with Ihe Choir of Ihe Trustee5, carry this out. Since January 2023. the Programme Managers hove been supported byo Communications Manager ond an Internships Monager. Related parties During the yeor, the Foundolion received donations. both in the form of cash and in- kind support. from Miflats Basildon, Miflats Croydon, Coventry House, Croydon Investment, Basildon Properties, Bracknell Properties ond Trocadero (London). Risk Management Through formol governance policies and procedures. corefully moniloring programmes and ensuring that controls exist over key financial systems. Ihe Foundotion has established effective ways to mitigate and monage risk5 to ils work. Further, afler examining operational risks faced by Ihe Foundation at different levels of governance ond manogement, measures, procedures and checks have been put in place lo ensure Ihat grant moking and scholarships are monitored os necessary. For example, before grants are awarded the Foundolion will carry out detailed due diligence on applicanl organisalions and their projecls, including speaking to ony current funders of the opplicants. Once gronts are awarded, where possible the Foundation slaff visit grantees, premises. projects and evenls lo inspect the work Ihal the Foundalion has awarded granls towards. Also, prior to making the final grant award. the Foundation requests progress reports from the grantees. Similarly, before awording o scholarship, the Foundation's staff conduct dve diligence on applicants including reviewing evidence of Iheir student debt and qualification5 as well a5 inleTviewing them ond obtaining references. After a scholarship is awarded, recipients are expected to submit reports from their university confirming their progres5 on Iheir course. The Aiz FoundcJlion 14 Truslees, report for the year to 31 March 2023 Governance and Management Icontinuedl Risk Management Icontinuedl Any risk around internships is managed through scrvliny of the host organisalion, interviewlsl wilh prospeclive interns and obtaining references for the interns. Host organisations also submit regular reports on the interns and the Foundation's stoff will meel separalely wilh the intern lo discuss their experiences during the internship. The Trustees have examined the risks faced by the Foundotion and are salisfied that syslems are In place to manage and miligate exposure to those risks. statement of Trustees, Responsibilities Th& Trust&es are responsible f(J preparing Ihe Tru5tees' report and financial slatements in accordance with applicable law and United Kingdom Accounling Standards Iunited Kingdom Generally Accepted Accounting Praclicel. The law applicable to charities in England and Wales requires the Trustees to prepare financial slatements for each financial year which give a true and foir view of the state of affairs of the charity and of the income and expenditure of Ihe chority for thot year. In preparing Ihese financiol stalements, the Trustees are required to.. selecl suitable accounting policies ond then apply Ihem consistently; observe established meth23 were £1.748.22212022.. £1.154.6641. Additionally. Rahimo Aiz woi aworded o discretionary tvition fèes scholarship in financiol yèar 2022-23 for on omount ol £nil12022- £9.2501. She wos not in any way involved in this decision or award. The Azr£ ￿n￿alKIn 122 The Trustees The Aziz Foundation 16 Babmaes Street London SW1Y 6HD 12 December 2023 ## **Our ref AFA002/KP/TB** Dear Trustees ## **Post-Audit Report – Year ended 31 March 2023** The purpose of this letter is to bring to the attention of the Trustees as those charged with governance the findings from our recent audit of the financial statements of The Aziz Foundation for the year ended 31 March 2023, for your consideration and to enable you to address matters arising where appropriate. Throughout this letter, “you” and “your” refer to the Trustees. “We” and “our” refer to Buzzacott LLP We appreciate that you will already be aware of some of the matters contained in this letter. However, in accordance with International Standards on Auditing (UK) (ISAs) we are communicating them to you formally. ## **1. Purpose of the audit** As auditor, we are responsible for performing the audit in accordance with ISAs (UK), which is directed towards forming and expressing an opinion on the financial statements for the year ended 31 March 2023 that have been prepared by management with the oversight of those charged with governance, and other matters required by legislation. Our work has been carried out in accordance with our audit planning letter dated 14 August 2023. Our audit work included consideration of the internal controls relevant to the preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of your system of internal control. Buzzacott LLP is a limited liability partnership and is registered in England and Wales with registered number OC329687 A list of LLP members is available at our registered office address as above. Registered to carry out audit work by the Institute of Chartered Accountants in England and Wales. The matters being reported are limited to those that were identified during the audit and that we conclude are of sufficient importance to merit being reported to those charged with governance. ## **2. Audit progress** We were able to complete the majority of the work in line with the agreed timetable. However, there were some delays in receiving the relevant information regarding grants payable. We would like to take this opportunity to thank all those with whom we dealt during the audit for their assistance and co-operation, in particular Saadia Mahmood and Aftab Ahmed. ## **3. Annual report and financial statements’ format** The financial statements have been prepared, as last year, in accordance with Accounting and Reporting by Charities: Statement of Recommended Practice (Charities SORP FRS 102). There are no significant changes to the format of the financial statements this year. ## **4. Auditor’s report** We do not propose any modifications to our audit report and, therefore, we are issuing an unqualified opinion in the report. The wording of our auditor’s report is unchanged from last year. ## **5. Adjustments made during the audit** Other than presentational amendments which have no impact on the reported results for the year, there were no adjustments made to the figures presented to us for audit. ## **6. Unadjusted misstatements** We are pleased to report that we found only clearly trivial misstatements during our audit for the period. ## **7. Accounting policies, accounting estimates and disclosures** The accounting policies used in preparing the financial statements are unchanged from the previous year. Our work included a review of the adequacy of disclosures in the financial statements and consideration of the appropriateness of the accounting policies and estimation techniques adopted by the charity. We found the disclosed accounting policies, significant accounting estimates and the overall disclosure and presentation to be appropriate for the charity. Page 2 of 8 The Trustees The Aziz Foundation 12 December 2023 ## **8. Letter of representation** We enclose the letter of representation which we will request the trustees to approve and sign at the same time as the financial statements. This includes acknowledgement of the trustees’ responsibility for the design and implementation of internal controls to prevent and detect fraud. As set out in our planning letter, we understand the following applied to the year ended 31 March 2023. - Trustees exercised effective oversight of management's processes for identifying and responding to the risks of fraud in the charity and a system of internal controls was in place to mitigate these fraud risks. - The key areas at most risk of fraud at the charity are through payments being made to false beneficiaries. - Trustees were not aware of any instances of actual, suspected, or alleged fraud, including misconduct or unethical behaviour related to financial reporting or misappropriation of assets. - There have not been any out of the ordinary transactions. If the above information is incorrect, please contact Katharine Patel or Tom Beswick. ## **9. Segregation of duties** We recognise that the number of your accounting staff makes a complete system of internal control impracticable and that the trustees exercise close personal supervision, which we consider reasonable in the circumstances. We have taken this into account in conducting our audit and in preparing this letter. ## **10. Accounting and internal control systems** Our work during the audit included an examination of some of the charity’s transactions, procedures and controls with a view to expressing an opinion on the financial statements for the year ended 31 March 2023. This work was not directed primarily towards discovering weaknesses, other than those that would affect our audit opinion, or towards the detection of fraud. We have included in this report only matters that have come to our attention as a result of our normal audit procedures and consequently our comments should not be regarded as a comprehensive record of all weaknesses that may exist or of all improvements that might be made. For the first time this year, and in light of the revised auditing standard (ISA 315) referred to in our planning letter, we placed increased emphasis on the charity’s IT controls and wider IT environment. Information was gathered at the planning stage in respect of access permissions to key systems housing financial data with controls over access being checked as part of the audit. We also gained a deeper understanding of the charity’s general IT infrastructure, its data storage and back up procedures. We found no significant deficiencies in the accounting and internal control systems during our audit. Page 3 of 8 The Trustees The Aziz Foundation 12 December 2023 ## **11. Prior year observation** We raised one observation in the prior year post audit report in relation to authorisation of expenditure. We are pleased to report that, based upon our audit testing this year, this appears to have been resolved. ## **12. Materiality** ## **Materiality threshold £43,100** ## **Reporting threshold: £2,155** Materiality refers to the relative significance of a particular matter in the context of the financial statements as a whole. An item would be considered material if its omission or its erroneous inclusion would reasonably influence the decisions of those using the financial statements. We are required to report corrected audit misstatements, and uncorrected audit misstatements in excess of our reporting threshold which is set at 5% of overall materiality. Our materiality threshold is based on 2% of expenditure. A lower level of materiality may be selected for specific areas of the financial statements and for some disclosure items e.g. transactions and other financial arrangements with trustees and their connected persons. When considering the impact of misstatements discovered during the course of our audit and considering the implications for our report of such misstatements, we will refer to this level amongst other things. Whether a misstatement is ‘material’ or not is ultimately down to the auditor’s judgement. ## **13. Professional ethics** In accordance with our profession’s ethical guidance and further to our letter to you dated 14 August 2023 confirming audit planning arrangements there are no further matters to bring to your attention in relation to Integrity, Objectivity and Independence. ## **14. Current developments** We have attached a summary of other recent and ongoing developments as Appendix A to this report. The matters included in this appendix may not all be directly relevant to the charity. However, we are aware that trustees may be involved with more than one organisation, and therefore we have included items for general information. Page 4 of 8 The Trustees The Aziz Foundation 12 December 2023 ## **15. Updates, insights and seminars** As part of our commitment to the charity sector, during the year the Charity Team issues occasional Updates and Insights on matters of relevance to the sector and also holds a number of seminars free of charge throughout the year. We would be delighted to welcome representatives of your charity to our seminars or to add trustees and management to our email distribution lists if this would be welcome. News and Insights are also available on our website at News and insights (buzzacott.co.uk), where there is also an opportunity to sign up to our mailing list should you wish. ## **16. Conclusion** This letter has been prepared for your private use only. It has been prepared on the understanding that it will not be shared with any third party without our prior written consent and we can therefore assume no responsibility to any other party. Any recommendations contained herein are based on the information you have provided and UK law and judicial and administrative interpretation as of the date of this letter. Should the facts provided to us be incorrect or incomplete, or should they change, our recommendations may be inappropriate. Buzzacott LLP accepts no liability for losses arising from changes in UK law, interpretation or practice or in public policy that are first published after the date of this letter. If you require any further information or assistance, we shall be very pleased to help you. Yours faithfully 12 December 2023 Page 5 of 8 The Trustees The Aziz Foundation 12 December 2023 ## **Trustees’ Annual Report and Accounts** ## **Financial Reporting Exposure Draft (FRED) 82** The Financial Reporting Council (‘FRC’) is currently undertaking its second triennial review of Financial Reporting Standard 102 (FRS 102), the underlying accounting framework under which the charity prepares its accounts. During 2023, the FRC released FRED 82, which outlined the proposed revisions to the next edition of FRS 102 and the consultation period closed on 30 April 2023. The FRC is currently considering the responses to this, and we expect a final version to be released in early 2024. For more information please visit: https://www.frc.org.uk/getattachment/e7cf66c5-7f1b-45b1-8620-2bd754f6c97f/20221215-FRED-82-At-aglance.pdf ## **Development of new Charity Statement of Recommended Practice (SORP)** An exposure draft of the new SORP is expected in late 2023, with implementation expected for accounting periods commencing on or after 1 January 2025. Briefings on 15 topics with proposed changes that have been considered by the SORP Committee are available at: https://charitysorp.org/engage-briefings-to-inform-theengagement-process-in-developing-the-next-sorp ## **Sustainability and reporting** Whilst many companies and organisations are including sustainability and climate change-related information in their annual reports, only the largest private and listed companies are required to provide such information. This disclosed information is not yet subject to any independent ‘checking’ which has resulted in the ‘greenwashing’ claims about some unverified information contained in annual reports. June 2023 saw the issue of the first two international sustainability reporting standards aimed at improving trust and confidence in company disclosures about sustainability and climate change. The two IFRS Sustainability Disclosure Standards are internationally effective from 1 January 2024 although they have not yet been adopted by UK standard setters. However, it is likely that compliance will become mandatory in the near future. To begin with, the obligation may only be for large companies but, the ‘trickle down’ process is likely to require many organisations to ensure that they can provide adequate information to others in their supply chain who have the reporting obligation. As is usually the way, the reporting obligation will ultimately be extended to smaller and not-for-profit entities. In anticipation of the above, it is advisable to start discussions around sustainability reporting and data early and more information can be found at: https://www.ifrs.org/issued-standards/ifrs-sustainability-standardsnavigator/. Page 6 of 8 The Trustees – Aziz Foundation 12 December 2023 ## **Charity Commission guidance on cost of living pressures** The Charity Commission has published guidance on managing financial difficulties as a result of the cost of living crisis covering key topics regarding trustee duty and decision-making, practical tips on what to do in situations where charities are in financial difficulty, what to do if the charity cannot continue to operate and a reminder on reporting serious incidents. The detailed guidance can be seen at: https://www.gov.uk/guidance/manage-financial-difficulties-in-your-charityarising-from-cost-of-living-pressures ## **Additional questions on Charity Annual Returns** The questions posed in the Charity Commission’s Annual Return have been updated for financial years starting on or after 1 January 2023. The most significant changes relate to smaller charities where, depending on the level of income, the number of responses required may be reduced. Narrative changes to some questions have been made to improve clarity and improvements in the glossary and guidance have also been made to help charities answer questions quickly and accurately. The detailed list of questions can be found at Appendix 8 at the following link: https://www.gov.uk/government/consultations/charity-commission-revisions-to-the-annual-return-2023-25 ## **Guidance on internal controls** The government has updated their guidance (CC8) on internal financial controls for charities. The revised guidance includes updates on digital payment systems, fraud and cybercrime. The Charity Commission's internal control checklist, a tool available for trustees and charity management to check controls against the latest legal requirements has also been updated to reflect the latest guidance. The Charity Commission recommends that internal financial controls should be reviewed at least once a year. The updated guidance and checklist can be found at Internal financial controls for charities at https://www.gov.uk/government/publications/internalfinancial-controls-for-charities-cc8 ## **Trustee Quiz** The Charity Commission has released a new Trustee Quiz to enable trustees to test their knowledge of their roles and responsibilities. It is aimed to engage trustees with questions based on everyday scenarios in a bid to identify any knowledge gaps and to act as a refresher for all trustees. The quiz takes three minutes to complete with feedback provided for each question and a score out of 10. The quiz can be found at: https://beingacharitytrustee.campaign.gov.uk/take-the-trustee-quiz/ Page 7 of 8 The Trustees – Aziz Foundation 12 December 2023 ## **UK employment law** A number of employment law regulatory changes have taken place in recent months including increases in statutory sick pay, updated redundancy pay calculations and national minimum wage increases which can impact organisations and their HR processes and documentation. The following insight provides detailed commentary on the changes and information on how Buzzacott can support: https://www.buzzacott.co.uk/insights/an-update-onuk-employment-law-2023 ## **Compliance** ## **Safeguarding** The Charity Commission has published a guide on the responsibilities for charities and trustees to keep everyone safe including staff, volunteers, and beneficiaries. Trustees must ensure their charity identifies and manages risks, have safeguarding policies and practices in place, carry out relevant checks (e.g. DBS), protect volunteers and staff, and have procedures to handle and report incidents appropriately. A detailed overview of safeguarding in charities, and how to implement the above action points can be found at: https://www.gov.uk/guidance/safeguarding-for-charities-and-trustees ## **Tax** **Charity tax returns – why are they so important?** Whilst it is not compulsory for charities to file a tax return, HMRC is able to perform random checks on charities to ensure exemptions are being claimed correctly. There is no blanket exemption on income generated by a charity because of their charitable status. If a charity receives income that does not fall under the available exemptions, then the profit element of the income will be subject to tax. The main forms of exempt charitable income are: - Donations and legacies; - Trading income, where this derives from activities in furtherance of or ancillary to the charity’s objectives, or activities carried out by the charity’s beneficiaries; and - Certain investment and property income. - If there is non-charitable trading income that does not fall under the above exemptions, the small-scale taxable trades exemption can be applied whereby a tax liability will not be applied if the non-charitable trading income is less than 25% of the charity’s total income, subject to a cap of £80,000. If £80,000 is breached, the total non-charitable trading income will be taxable. Further information can be found at: https://www.buzzacott.co.uk/insights/charity-tax-returns-why-are-they-so-important Page 8 of 8 The Trustees – Aziz Foundation 12 December 2023