2025-08-31-accounts

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Registered number: 00913833 Charity number: 309640

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED (A Company Limited by Guarantee)

GOVERNORS' REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 AUGUST 2024

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

	Page
Reference and Administrative Details of the Charitable company, its Governors and	1 - 2
Advisers
Governors' Report	3 - 9
Governors' Responsibilities Statement	10
Independent Auditor's Report on the Financial Statements	11 - 14
Statement of Financial Activities	15
Balance Sheet	16
Statement of Cash Flows	17
Notes to the Financial Statements	18 - 36

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

REFERENCE AND ADMINISTRATIVE DETAILS OF THE CHARITABLE COMPANY, ITS GOVERNORS AND ADVISERS FOR THE YEAR ENDED 31 AUGUST 2024

Governors	Mr ND Lawson-Smith, Chairman1
	Mrs LA Chitty2
	Mrs A Coull2
	Mr S Cover1
	Mr C Davies, Chair of Welfare & Compliance Committee2
	Mrs J Forrest, Deputy Chair2,3
	Mrs V Gill, Chair of Finance & Estates Committee1,3
	Mr E Hayter1
	Mr G J Varney, Lead for Buildings & Estates1
	Mr A Wildman (retired 23 March 2024)1
	Mrs L Strange (appointed 24 June 2023)1
	Mr D Hatzis (appointed 23 March 2024)1
	Mrs N Sharff (appointed 23 March 2024)1
	Mrs P Johnson (retired 24 June 2024)
1 Member of the Finance and Estates Committee 2 Member of the Education Welfare & Compliance Committee 3 Member of the Nominations Committee Company registered number 00913833 Charity registered number 309640 Registered office Carswell Manor Faringdon Oxon SN7 8PT Bursar and company secretary Mr A Hamilton Headmaster Mr D Griffiths (appointed from 01/09/2023) Independent auditor Crowe U.K. LLP R+ Building 2 Blagrave Street Reading Berkshire RG1 1AZ Bankers Lloyds Bank Plc 82 Regent St Swindon SN1 1JZ

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ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

REFERENCE AND ADMINISTRATIVE DETAILS OF THE CHARITABLE COMPANY, ITS GOVERNORS AND ADVISERS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2024

Solicitors

Harrison Clark Rickerby's Ellenborough House Wellington Street Cheltenham GL50 1YD

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ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

GOVERNORS' REPORT FOR THE YEAR ENDED 31 AUGUST 2024

The Governors of St Hugh’s School (Carswell) Trust Limited present their annual report, which incorporates the Strategic Report for the year ended 31 August 2024 under the Companies Act 2006 and the Charities Act 2011, together with the audited financial statements for the year and confirm that the latter comply with the requirements of the Companies Act 2006, the Company's Memorandum & Articles of Association and the Charities Statement of Recommended Practice - “Accounting and Reporting by Charities” (issued in March 2015).

REFERENCE & ADMINISTRATIVE INFORMATIO N

St Hugh’s School (Carswell) Trust Limited ("St Hugh’s") is a charitable company founded in 1967, Charity registration number 309640 and Company registration number 00913833, with the liability of its members limited to £10 each by guarantee. The Registered Office and principal address of the Company is Carswell Manor, Carswell, Faringdon, Oxfordshire, SN7 8PT.

Governors

The School continues to be organised and administered by a Board of Governors (who legally act as the Board of Directors of the Company and as Trustees of the Charity). The Governors who served during the year are:-

Mr N D Lawson-Smith 1 Chairman Mrs L A Chitty 2 Mrs A Coull 2 Mr S Cover 1 Mr C Davies 2 Chair of Education Welfare & Compliance Committee Mrs J Forrest 2, 3 Duputy Chair Mrs V Gill 1, 3 Chair of Finance & Estates Committee Mr D Hatzis 1 (Appointed March 24) Mr E Hayter 1 Mrs N Sharff 1 (Appointed March 24) Mrs L Strange 1 (Appointed March 24) Mr G J Varney 1 Lead for Buildings and Estates Mr A Wildman 1 (Retired March 2024) Mrs P johnson (Retired June 2024)

1 Member of the Finance and Estates Committee.

2 Member of the Education Welfare & Compliance Committee 3 Member of the Nominations Committee.

Key Executives

Headmaster Mr D Griffiths Bursar Mr A Hamilton Senior Deputy Head Academic Mr B Leullier Deputy Head Operations Mr D Maitland Deputy Head Pastoral Mr R Clarke Head of Middle School Mrs J Veness Head of Pre-Prep Mrs J Blythe Director of future schools/Senior Tutor Mrs S Ewins Registrar Mrs C Rich (Left 31/08/24)

STRUCTURE, GOVERNANCE AND MANAGEMENT

Governing Document

The Company was governed by its Memorandum and Articles of Association dated 23 August 1967, up until the adoption of new Articles of Association on 2 March 2013.

Governing Body

The Governors are elected at a full Governors’ Meeting on the basis of recommendations received from other

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ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

GOVERNORS' REPORT (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2024

Governors, the Headmaster, and the Bursar. A skills audit is undertaken each year to clarify what professional expertise is required when recruiting new members to the Board. Members of the Board serve for 3 years and may apply for re-election for 4 successive terms.

The Chairman and Vice-Chairman of the Board are elected each year at the Annual General Meeting. The article requires the number of members of the Board to be not less than eight and not more than fourteen. Governors are required to be re-appointed every three years. At the date of this report, there were 12 Governors.

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ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

GOVERNORS' REPORT (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2024

Training

New Governors are introduced into the workings of the School, and of the Company as a registered Charity, including Board policy and procedures, by the Headmaster and Bursar, who also organise periodic strategic planning and trustee training workshops for all Governors. Governors also receive an induction pack containing important information.

This year, the Governors have completed a range of AGBIS training sessions and St Hugh’s is one of the first schools to be awarded the AGBIS/HMC Certification for ‘Good Governance’

Organisational Management

The Governors meet as a Board at least three times a year to determine the general policy of the Company and review its overall management and control, for which they are legally responsible. More detailed management activity is undertaken by the Finance and Estates Committee and the Education, Welfare and Compliance Committee which both meet termly. The day-to-day running of the School is delegated to the Headmaster and the Bursar who are supported by other members of the School Leadership Team.

Group structure and relationships

St Hugh’s is an active member of the Independent Association of Preparatory Schools (IAPS) for the promotion and maintenance of preparatory school standards generally and also takes part in peer group studies for the evaluation of quality and performance improvement methods. The School is also a member of Independent Schools’ Bursars Association (ISBA) for the promotion of efficient and effective administration and ancillary services at independent schools and the Association of Governing Bodies of Independent Schools (AGBIS).

Despite the School’s isolated situation, we co-operate with as many charities as we are able, in our ongoing endeavours to widen access to the schooling we provide, to optimise the educational use of our cultural and sporting facilities and to awaken in our pupils an awareness of the wider social context of the education they receive at the School.

St Hugh’s benefits from the generosity of a thriving network of parents under the name of FOSH (Friends of St Hugh’s School) whose close support we greatly appreciate and gladly acknowledge.

Throughout the year the pupils of the School have raised funds for a number of charities as a result of awareness of issues in the outside world brought to their attention through the school curriculum.

AIM, OBJECTIVES, PRINCIPAL ACTIVITIES AND PUBLIC BENEFIT

The principal objectives of the Company, in accordance with its Articles of Association are to advance for the public benefit education in the United Kingdom, by maintaining, managing and developing a school offering a broad and balanced curriculum and to provide day and boarding education for boys and girls from the age of 3 to 13 years old. In the furtherance of these objectives the Governors, as the Charity Trustees, have complied with the duty in Section 4 of the Charities Act 2011 to have due regard to the Charity Commission’s published general and relevant sub sector guidance concerning the operation of the Public Benefit requirement under the Act.

Strategic Aim and Intended Effect

The Board’s strategic aim to reach its annual objective for the public benefit is to provide a co- educational independent preparatory school with a clear sense of purpose: to operate a wide access admissions policy for assisting children from lower income and otherwise disadvantaged families in order to benefit from a secure educational foundation and to gain the confidence to be adaptable and independent as they prepare for life beyond the School. We aim to give them all the opportunity and encouragement to develop their own interests and talents, while learning to work and play together and to contribute positively to their community. There is no competitive selection; we both welcome and cater for pupils of a wide range of ability. Our aim is to foster confidence and a love of learning across this range; an outstanding Scholarship and Common Entrance record and the provision of integral learning support both bear testimony to our inclusive approach.

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ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

GOVERNORS' REPORT (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2024

Objectives for the Year

The Board's main objectives continue to be

to educate all the School's pupils to a high standard so that they will be fully able to benefit from their chosen senior school for the completion of their education in due course
to develop further our bursary and other funding sources in order to increase the number of children entering the School from lower income families and
to continue to develop collaborative working with other charities and educational bodies.

Our strategy for achieving this is to recruit the best teaching and teaching support staff available, to identify each individual child’s needs and to tailor our teaching methods as appropriate in each case, and to build up our bursary funds as well as our referrals network of external funding sources for those in need of assistance with school fees. This is supported by a strong, effective pastoral care system. Furthermore we will continue to forge close working relationships with local maintained schools in order that we can share our educational and other facilities.

The School has an agreed, comprehensive development plan, published for parents, in which is outlined the strategic objectives, which include maintaining high standards of teaching and learning, the development of boarding, staff professional development, developing our facilities (particularly increasing the availability of the new Swimming Pool, improving dining/catering facilities, the improvement in ICT provision, enhancements in communication and the maintenance of a high quality, broad education).

Principal Activity

St Hugh’s principal activity continues to be the provision of a co-educational boarding and day school for children aged 3 to 13 years.

Volunteers

Funds held by Friends of St Hugh’s School (FOSH) are fully incorporated into the School’s accounts as a separate restricted fund. All fundraising events have been carried out within the School’s accounting and risk management procedures. Funds raised by FOSH are used to help fund the special projects and developments of the School. FOSH retains the right to elect a committee which also consists of the Headmaster and the Bursar. FOSH is committed to donating funds each year to charities chosen by the management committee.

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ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

GOVERNORS' REPORT (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2024

STRATEGIC REPORT

Achievements and performance Operational performance of the School

The number of pupils attending the School remained steady throughout the year averaging 323 full time pupils and around 15 part-time nursery pupils per term. All children at age 13+ (Year 8) passed appropriate entrance examinations to the senior schools of their parents’ choice. Of that number, a record 24 awards and scholarships were won by these pupils.

Means-tested bursaries were in place for thirty children. Twelve new awards were offered to pupils during the academic year, allowing financially disadvantaged families to benefit. Two of the awards granted during the reporting period were valued at 100% of the day fees. Of other awards, eight were at 50% or greater of the day fees. All bursaries are assessed, and regularly reviewed, on a needs basis as determined by the Governors, and amounted to £288k in the financial year reported. A further £29k in discounts was given to Armed Forces families. As a fee-paying School, we continue to provide benefit to the general public by reducing the burden on state-maintained schools in both terms of pupil numbers and funding.

FOSH

Parents of the school run the “Friends of St Hugh’s” FOSH, with the objective of raising money for the benefit of the school and its pupils and other charities.

During the year they ran the Fireworks display, Quiz, Christmas Fayre and Summer Fete. A total of £4k was raised for the school pupils and was spent on new table tennis tables and equipment, other playground equipment and the Leavers Hoodies.

House Charities

There is a two-year cycle for the House Charities - children anonymously suggest registered charities which could be put forward for consideration. A shortlist is made and then the Houses decide by vote.

St Hugh’s supports Four House Charities in Years 5-8.
Bickley House: Cancer Research UK
Carswell House: Yellow Submarine - Support for learning disabilities and autism in Oxfordshire
Chislehurst House: Big Step Forward (Pancreatic Cancer)
Malvern House: Blue Sky Thinking - Children’s brain tumour charity

Fundraising Events during the Year:

MacMillan Coffee morning, cakes made by and sold to staff.
Hello Yellow Day – Mental Health Awareness funded Young Minds
Harvest Festival collections. PP food collection went to Abingdon foodbank and MS/US collections to Faringdon and Wantage & Grove Foodbanks
Read-a-thon
Poppy sale in support of the Royal British Legion
Fireworks Display – funds raised for FOSH and Shelter
Children in Need– Cake sale in Pre-Prep and sale of Pudsey wrist bands
Christmas collection of children’s gifts under £10 for the Oxford Foodbank Christmas lunch
Christmas Fayre – funds raised for FOSH and the House Charities
Santa’s In a Box – sponsored fun run that raised money for Helen and Douglas House
Christmas concert at Radley College, donation made to Headway, Oxfordshire for use of chapel. Retiring collection raised funds for House Charities.
Nativity play retiring collection for House Charities.
Cauliflower Christmas cards sold for House Charities.
Year 8 painting auction raised funds for House Charities.
Quiz night – funds raised for FOSH.
Red Nose Day– children donated to wear a touch of red.
Pre-prep Cake Sale in aid of house charities

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ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

GOVERNORS' REPORT (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2024

Big Toddle by Nursery in aid of Barnardo’s
Year 8 and FOSH Summer Fete – raised money for House Charities and FOSH
The Knight Frank Schools Triathlon with Restless Development at Marlborough College, everything raised between £50 and £100, by each team of 4 St Hughs Children, went to House Charities. Everything under £50 and over £100 went to the Restless Development Charity.
Sale of second-hand school clothing.

In total, all fundraising events and donations raised £26.7k and £3.8k was raised from the sale of second-hand uniform. (2023: £26.6k + £5.6). This was paid out to fourteen different charities. FOSH raised £6,283 for the school pupils.

Local collaborations and partnerships:

The Mulberry Bush – Special school working with those made vulnerable by childhood trauma.

Chamber Choir performed in their Fundraising Concert in Bampton Church
Buckland School
A programme of free swimming lessons was provided.
Forest School facilities were provided for no charge.
Buckland Village
Use of the cricket fields and pavilion for annual fundraising cricket match
Oxfordshire Downs Cricket Club - Use of cricket pitches and pavilion

Youth challenge Oxfordshire - Free use of minibuses for weekends and holidays.

Oxfordshire Cricket - Use of sports hall nets for winter training and junior pathway development Faringdon U11 Football Club - Provide access to Astroturf with floodlights for winter training. Active Oxfordshire

Donated sports kit including footballs for Asylum seekers in the area and local grassroots community clubs.

We do not carry out street fundraising, nor do we undertake fundraising mail shots or telephone canvassing.

Financial review

Unrestricted funds resulted in a loss before transfers amounting to £108,942 (2023: loss £245,043) and the restricted funds balance of reserves was increased by £3,401 before transfers (2023: increased by £330) giving a total loss for the year of £105,541 (2023: loss £244,713).

The market value of the School properties is in excess of book value and this is reviewed by the lead governor for Buildings and Estates, biannually.

Reserves Policy

All operating surpluses are invested in fixed assets and Teaching resources in order to ensure the continued development and viability of the School.

Long-term strategic plans are carefully reviewed to ensure that they can be properly funded within the available funding and all expenditure is carefully monitored to ensure that budgets laid down by the Board are not exceeded. In the unlikely event of needing to call upon reserves the level and variety of fixed assets held are such that appropriate assets could be realised or used as security to raise sufficient resources to meet requirements. Total assets of £22m can be leveraged as security but residential property on site has an estimated value of £3.5m which could be utilised without negatively affecting operations.

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ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED (A Company Limited by Guarantee)

GOVERNORS' REPORT (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2024

The Board’s policy is to continue to generate surpluses in order to equip the School with up-to-date facilities needed to maintain and improve upon the high standard of educational services currently provided.

Investment Policy

The School will endeavour to invest its cash surplus funds wisely and with a low-risk philosophy to ensure funds not immediately required attract an interest return.

Pay policy for senior staff

The senior management team comprise the key management personnel of the Charity in charge of directing and controlling, running and operating the Charity on a day-to-day basis. The pay of the senior staff is reviewed annually and regularly benchmarked against pay levels in comparable independent schools.

Future plans

The School Development Plan enshrines the strategic objectives of the School. This plan is dynamic and evolves from full consultation with staff, parents, pupils and Governors and covers all aspects of the School’s future development. It is reviewed and evaluated on a regular basis and made available to parents. The key objectives at present are to maintain pupil numbers and academic standards and to increase the operating surplus to finance the on-going capital expenditure needed to upgrade the School's facilities and provide sufficient funds to satisfy the School’s commitment to the 2011 Charities Act Public Benefit guidance.

Principal risks and uncertainties

The School has a risk management plan which is maintained by the Bursar and considered by the Governors annually. Where appropriate mitigating action is taken to reduce the likelihood and/or the potential impact of any risks identified.

The most significant risk to the School’s future would be falling pupil numbers and trends are reported to Governors by the Headmaster at each Board Meeting. In addition, the risk management plan identifies, as a priority, all possible events that might precipitate a decline in numbers. The Finance Committee regularly reviews performance resilience to ensure that the school is capable of surviving in the event of a reduction in pupil numbers.

There is currently significant strategic external risk attributed to the Labour Party commitment to introducing VAT on fees which is likely to impact on the financial security of the School as affordability and competition becomes more acute. Business rate relief is also set to be withdrawn and employer NI to increase, adding significant financial pressure on the whole independent school sector. The October 24 budget confirmed that VAT at 20% will be imposed as early as January 2025. The School is investigating all the options to reduce the impact on families and pass on the minimum increase in fees.

The Board with particular assistance from the Headmaster, Bursar and the SLT, continue to keep the School's activities under review, particularly with regard to any major operational risks that may arise from time to time as well as the systems and procedures established to manage them. The major risks identified by this process have been mitigated to an acceptable level by internal control systems and other factors as appropriate; insurance cover is reviewed annually to ensure risks are appropriately covered. The Bursar chairs regular meetings of the Health & Safety Committee.

Approved by order of the members of the board of Governors and signed on their behalf by:

Mr ND Lawson-Smith

(Chair of Trustees) Date:

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ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

STATEMENT OF GOVERNORS' RESPONSIBILITIES FOR THE YEAR ENDED 31 AUGUST 2024

The Governors (who are also the directors of the charitable company for the purposes of company law) are responsible for preparing the Governors' Report including the Strategic Report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Company law requires the Governors to prepare financial statements for each financial . Under company law, the Governors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the charitable company and of its incoming resources and application of resources, including its income and expenditure, for that period. In preparing these financial statements, the Governors are required to:

select suitable accounting policies and then apply them consistently;
observe the methods and principles of the Charities SORP (FRS 102);
make judgments and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards (FRS 102) have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charitable company will continue in business.

The Governors are responsible for keeping adequate accounting records that are sufficient to show and explain the charitable company's transactions and disclose with reasonable accuracy at any time the financial position of the charitable company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the charitable company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Approved by order of the members of the board of Governors and signed on its behalf by:

Mr ND Lawson-Smith (Chair of Trustees)

Date:

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ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED (A Company Limited by Guarantee)

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

Opinion

We have audited the financial statements of St. Hugh's School (Carswell) Trust Limited (the 'charitable company') for the year ended 31 August 2024 which comprise the Statement of Financial Activities, the Balance Sheet, the Statement of Cash Flows and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

give a true and fair view of the state of the charitable company's affairs as at 31 August 2024 and of its incoming resources and application of resources, including its income and expenditure for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the charitable company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Governors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the charitable company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the Governors with respect to going concern are described in the relevant sections of this report.

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ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED (A Company Limited by Guarantee)

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED (CONTINUED)

Other information

The other information comprises the information included in the Annual Report other than the financial statements and our Auditor's Report thereon. The Governors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

the information given in the Governors' Report including the Strategic Report for the financial year for which the financial statements are prepared is consistent with the financial statements.
the Governors' Report and the Strategic Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of our knowledge and understanding of the charitable company and its environment obtained in the course of the audit, we have not identified material misstatements in the Governors' Report including the Strategic Report.

We have nothing to report in respect of the following matters in relation to which Companies Act 2006 requires us to report to you if, in our opinion:

adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of Governors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.

Responsibilities of governors

As explained more fully in the Governors' Responsibilities Statement, the Governors (who are also the directors of the charitable company for the purposes of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Governors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Governors are responsible for assessing the charitable company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Governors either intend to liquidate the charitable company or to cease operations, or have no realistic alternative but to do so.

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ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED (CONTINUED)

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor's Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

We identified and assessed the risks of material misstatement of the financial statements from irregularities, whether due to fraud or error, and discussed these between our audit team members. We then designed and performed audit procedures responsive to those risks, including obtaining audit evidence sufficient and appropriate to provide a basis for our opinion.

We obtained an understanding of the legal and regulatory frameworks within which the School operates, focusing on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. The laws and regulations we considered in this context were taxation legislation, together with the Charities SORP (FRS 102). We assessed the required compliance with these laws and regulations as part of our audit procedures on the related financial statement items.

In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which might be fundamental to the School’s ability to operate or to avoid a material penalty. The laws and regulations we considered in this context for the School operations were The Education (Independent School Standards) Regulations 2014, Health and Safety, General Data Protection Regulations, Safeguarding and Food Standards. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the Governors and other management and inspection of regulatory and legal correspondence, if any.

We identified the greatest risk of material impact on the financial statements from irregularities, including fraud, to be within the override of controls by management. Our audit procedures to respond to risk of management override included enquiries of management about their own identification and assessment of the risks of irregularities, sample testing on the posting of journals, reviewing accounting estimates for biases, reviewing regulatory correspondence with the Charity Commission and Independent Schools Inspectorate, and reading minutes of meetings of those charged with governance.

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing noncompliance and cannot be expected to detect non-compliance with all laws and regulations.

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ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED (CONTINUED)

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor's Report.

Use of our report

This report is made solely to the charitable company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the charitable company's members those matters we are required to state to them in an Auditor's Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charitable company and its members, as a body, for our audit work, for this report, or for the opinions we have formed.

THIS REPORT HAS NOT YET BEEN SIGNED

Alastair Lyon (Senior Statutory Auditor)

for and on behalf of Crowe U.K. LLP Statutory Auditor R+ Building 2 Blagrave Street Reading Berkshire RG1 1AZ

Date:

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ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

STATEMENT OF FINANCIAL ACTIVITIES (INCORPORATING INCOME AND EXPENDITURE ACCOUNT) FOR THE YEAR ENDED 31 AUGUST 2024

Note Income from: Charitable activities: 4 School fee income Additional activities Other trading activities Investments Total income Expenditure on: Raising funds 6 Charitable activities 6 Total expenditure Net movement in funds Reconciliation of funds: Total funds brought forward Net movement in funds Total funds carried forward	Unrestricted funds 2024 £ 7,005,647 43,937 330,986 10,735 7,391,305 3,187 7,515,413 7,518,600 (127,295) 4,223,146 (127,295) 4,095,851	Restricted funds 2024 £ - - 17,950 206 18,156 14,755 - 14,755 3,401 16,207 3,401 19,608	Total funds 2024 £ 7,005,647 43,937 348,936 10,941 7,409,461 17,942 7,515,413 7,533,355 (123,894) 4,239,353 (123,894) 4,115,459	Total funds 2023 £ 6,467,555 42,872 288,896 1,259 6,800,582 24,380 7,020,915 7,045,295 (244,713) 4,484,066 (244,713) 4,239,353

The Statement of Financial Activities includes all gains and losses recognised in the year.

The notes on pages 18 to 36 form part of these financial statements.

Page 15

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED (A Company Limited by Guarantee) REGISTERED NUMBER: 00913833

BALANCE SHEET AS AT 31 AUGUST 2024

Note Fixed assets Tangible assets 10 Current assets Stocks 14 Debtors 11 Cash at bank and in hand Creditors: amounts falling due within one year 12 Net current liabilities Total assets less current liabilities Creditors: amounts falling due after more than one year 13 Total net assets Charity funds Restricted funds 15 Unrestricted funds 15 Total funds	7,643 311,920 1,612,302 1,931,865 (2,051,774)	2024 £ 8,606,011 8,606,011 (119,909) 8,486,102 (4,370,643) 4,115,459 19,608 4,095,851 4,115,459	9,512 214,425 360,785 584,722 (1,463,221)	2023 £ 9,035,112 9,035,112 (878,499) 8,156,613 (3,917,260) 4,239,353 16,207 4,223,146 4,239,353

The Governors acknowledge their responsibilities for complying with the requirements of the Act with respect to accounting records and preparation of financial statements.

The financial statements were approved and authorised for issue by the Governors on _______ and signed on their behalf by:

Mr ND Lawson-Smith

(Chair of Trustees)

The notes on pages 18 to 36 form part of these financial statements.

Page 16

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 AUGUST 2024

Note Cash flows from operating activities Net cash used in operating activities 21 Cash flows from investing activities Interest paid Net cash used in investing activities Cash flows from financing activities Cash inflows from new borrowing Repayments of borrowing Purchase of fixed assets Investment income Net cash used in financing activities Change in cash and cash equivalents in the year Cash and cash equivalents at the beginning of the year 22 Cash and cash equivalents at the end of the year 22	2024 £ 1,803,651 (208,141) (208,141) - (287,347) (67,587) 10,941 (343,993) 1,251,517 360,785 1,612,302	2023 £ 467,503 (174,281) (174,281) 303,000 (305,945) (310,259) 1,259 (311,945) (18,723) 379,508 360,785

The notes on pages 18 to 36 form part of these financial statements

Page 17

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED (A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

1. General information

St Hugh's School (Carswell) Trust Limited is a company limited by guarantee, incorporated in England and Wales (company number: 00913833; charity number: 309640). The address of its registered office and principal place of business is Carswell Manor, Carswell, Faringdon, Oxfordshire, SN7 8PT.

The principal activity of the Charity is to advance the public benefit education by maintaining, managing and developing a school.

The financial statements are presented in Pounds Sterling as this is the functional currency of the economic environment in which the Charity operates.

Monetary amounts in these financial statements are rounded to the nearest £.

2. Accounting policies

2.1 Basis of preparation of financial statements

The financial statements have been prepared in accordance with the Charities SORP (FRS 102) - Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (effective 1 January 2019), the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) and the Companies Act 2006.

St. Hugh's School (Carswell) Trust Limited meets the definition of a public benefit entity under FRS 102. Assets and liabilities are initially recognised at historical cost or transaction value unless otherwise stated in the relevant accounting policy.

2.2 Going concern

Recent strategic impacts on the sector have been significant. Loss of business rates relief has been built into budgets but VAT on fees was brought forward to January 2025 and NI costs of c.£100K had not been considered. This has now been factored into forecast and 5 year budget which is refined through the year to inform decisions on staff pay and fee increases.

As part of the risk management process, the Governors have examined the major risks to the School and the mitigating actions both taken and available to be taken. The Governors consider there are no material uncertainties relating to going concern and continue to adopt the going concern basis, meaning the School has adequate resources to continue its activities for at least the twelve months to 31 March 2026.

2.3 Income

Fee income represents fees receivable in respect of tuition and accommodation of pupils in the period. Fees received for education to be provided in the future are treated as deferred income. Donations are brought into income in the year during which they are received.

Registration fees and fees for additional activities are recognised as income in the year in which they are receivable.

Page 18

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED (A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

2. Accounting policies (continued)

2.4 Expenditure on buildings

All expenditure incurred on buildings is written off in the year in which it arises except where additional teaching or accommodation space is achieved, in which case it is capitalised.

2.5 Tangible fixed assets and depreciation

Fixed assets are included in the financial statements at cost, less accumulated depreciation. Individual assets costing more than £3,000 are capitalised.

Depreciation is charged so as to allocate the cost of tangible fixed assets less their residual value over their estimated useful lives, using the straight-line method.

Depreciation is provided on the following bases:

Freehold property	- Buildings are depreciated to their residual
	value over 25 years unless they have planning
	authority for a shorter period in which case they
	are depreciated over this shorter life.
Sports equipment	- 10%
School equipment	- 10% - 20%
Fixtures and equipment	- 10% - 33.3%

Assets in the course of construction (ACOC) are held at their actual cost as at the financial year-end and are not depreciated until they are complete and handed to the School for use.

2.6 Operating leases

Rentals paid under operating leases are charged to the Statement of Financial Activities on a straight-line basis over the lease term.

2.7 Stocks

Stocks are valued at the lower of cost and net realisable value.

2.8 Taxation

The Company is registered as a Charity and is entitled for the current year to the exemptions provided by Section 505 Income and Corporation Taxes Act 1988.

2.9 Value Added Tax

The Company is exempt from registration for value added tax purposes. All items of expenses in the income and expenditure account therefore include, where appropriate, the related amount of value added tax.

Page 19

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

2. Accounting policies (continued)

2.10 Pensions

The School has contributed to the Aviva Pension Trust for Independent Schools (APTIS) which is a defined contribution scheme.

The School also contributes to personal pension schemes for non-teaching staff and these contributions are accrued in the period to which they relate.

2.11 Allocation of costs to direct charitable and other expenditure

All expenditure is included on an accruals basis and is recognised when there is a legal or constructive obligation to do so.

Expenditure is summarised under functional headings either on a direct cost basis or, for overhead costs, apportioned according to management estimates of staff time spent.

Charitable activities include costs directly related to the running of the School.

Support costs represent the staffing and associated costs of finance, personnel and general administration in supporting the School and Governance costs which include the cost of governance arrangements which relate to the general running of the charitable company as opposed to the direct management functions inherent in generating funds or service delivery of the charitable activities.

Trading costs relate to the costs of goods sold.

Expenditure on raising funds includes all expenditure incurred by the charitable company to raise funds for its charitable purposes and includes costs of all fundraising activities events and noncharitable trading.

Expenditure on charitable activities is incurred on directly undertaking the activities which further the charitable company's objectives, as well as any associated support costs.

2.12 Grants payable

Grants payable are charged as expenses in the year during which they are paid.

2.13 Fund accounting

Unrestricted funds are funds that can be used in accordance with the charitable objects at the discretion of the Governors.

Designated funds comprise unrestricted funds that have been set aside by the Governors for particular purposes.

Restricted funds are funds that can only be used for particular restricted purposes within the objects of the charitable company. Restrictions arise when specified by the donor or when funds are raised for particular restricted purposes. Further explanation of the nature and purpose of each fund is included in the notes to the accounts.

Page 20

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

2. Accounting policies (continued)

2.14 Financing

Bank charges incurred in obtaining external debt finance are offset against the outstanding balance repayable over the periods of maturity.

2.15 Financial instruments

The charitable company only has financial assets and financial liabilities of a kind that qualify as basic financial instruments. Basic financial instruments are initially recognised at transaction value and subsequently measured at their settlement value.

2.16 Cash at bank and in hand

Cash at bank and in hand includes cash and short-term highly liquid investments with a short maturity of three months or less from the date of acquisition or opening of the deposit or similar account.

3. Critical accounting estimates and areas of judgment

In applying the charitable company's accounting policies, the Governors are required to make judgements, estimates and assumptions in determining the carrying amounts of assets and liabilities. The Governors' judgements, estimates and assumptions are based on the best and most reliable evidence available at the time when the decisions are made, and are based on historical experience and other factors that are considered to be applicable. Due to inherent subjectivity involved in making such judgements, estimates and assumptions, the actual results and outcomes may differ.

Critical accounting estimates and assumptions:

During the 2021 financial year, the charitable company purchased and refurbished Rushey Cottage. This property is currently being rented out rather than used by the school. Therefore this property is currently shown as investment property within note 10 and will be held at fair value rather than cost less depreciation while it continues to be rented out. The Governors believe that the purchase price and refurbishment costs in the current year fairly represents the fair value as at 31 August 2024.

Page 21

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

4. Income from charitable activities

The income and surplus is attributable to the principal activity of running a preparatory school. The income all arose within the United Kingdom.

Unrestricted funds 2024 £ School fees 7,515,411 Less: Bursaries and allowances (509,764) Total net fees 7,005,647 Additional activities 43,936 7,049,583	Restricted funds 2024 £ - - - - -	Total funds 2024 £ 7,515,411 (509,764) 7,005,647 43,936 7,049,583	Total funds 2023 £ 6,912,304 (444,749)
			6,467,555 42,872
			6,510,427

5. Income from other trading activities

Unrestricted funds 2024 £ Income from fundraising events 19,912 Surcharge for late fees 6,292 Lettings and rents receivable 304,782 330,986	Restricted funds 2024 £ 17,950 - - 17,950	Total funds 2024 £ 37,862 6,292 304,782 348,936	Total funds 2023 £ 38,049 5,194 245,653
			288,896

Page 22

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

6. Expenditure

Generating funds: Fundraising costs Restricted expenditure Charitable activities: School operating costs: Teaching Welfare Premises Support costs Total expenditure	2024 £ 3,187 14,755 17,942 3,749,118 969,920 1,495,678 1,300,697 7,515,413 7,533,355	2023 £ 8,763 15,617
		24,380 3,573,752 880,154 1,362,118 1,204,891
		7,020,915
		7,045,295

Included in premises costs is a depreciation charge of £496,688 (2023: £520,602) .

7. Support costs

Salaries Office and other administration costs Finance costs Governance costs (see note 8)	2024 £ 517,966 434,221 245,845 102,665 1,300,697	2023 £ 495,111 438,518 191,261 80,001
		1,204,891

Finance costs include bank and loan interest paid of £208,141 (2023: £174,281) and bank loan charges released of £1,500 (2023: £4,622) .

Page 23

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

8. Governance costs

Auditor's remuneration - audit Governors training and expenses Professional, legal and consultancy fees Statutory inspection costs	2024 £ 25,528 1,045 71,236 4,856 102,665	2023 £ 20,918 265 55,788 3,030
		80,001

9. Staff costs

Wages and salaries Social security costs Contribution to defined contribution pension schemes	2024 £ 3,681,624 345,201 478,233 4,505,058	2023 £ 3,478,210 330,440 452,640

		4,261,290

The average number of persons employed by the charitable company during the year was as follows:

Teaching Non-teaching	2024 No. 86 38 124	2023 No. 86 36

		122

No compensation payments were made in the year to 31 August 2024 (2023: £58k).

No trustee received remuneration during the year (2023: £Nil) .

Four trustees incurred travel costs in the year of £935 (2023: £190) .

Trustees' indemnity insurance for cover of £2m cost £1,300 (2023: £1,300) .

In addition to staff employed directly by the School, 14 catering staff and 6 cleaning staff are employed under 2 sub-contracts. (2023: 14 catering and 6 cleaning staff under 2 sub contracts) .

The costs of the catering and cleaning contracts for the year were respectively £340,211 and £118,250 (2023: £284,681 and £108,952) .

Page 24

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

9. Staff costs (continued)

The number of employees whose employee benefits (excluding employer pension costs) exceeded £60,000 was:

	2024	2023
	No.	No.
In the band £60,001 - £70,000	4	3
In the band £70,001 - £80,000	2	-
In the band £90,001 - £100,000	1	2
In the band £140,001 - £150,000	1	-

The number of higher paid staff to which benefits were accruing under defined contribution pension schemes is 5 (2023: 4) . The contributions paid to this were £Nil (2023: £Nil ).

The school considers its key management personnel to comprise the School Leadership Team; the Headmaster, Bursar, Deputy Head Operations, Deputy Head Academic, Deputy Head Pastoral, Head of Middle School, Head of Pre-Prep and Registrar. The total cost to employ this team including employer pension and employer NI contributions, was £886,377 (2023: £608,956).

Page 25

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED (A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

10. Tangible fixed assets

Cost or valuation At 1 September 2023 Additions Transfers between classes At 31 August 2024 Depreciation At 1 September 2023 Charge for the year At 31 August 2024 Net book value At 31 August 2024 At 31 August 2023	Investment property £ 1,050,000 - - 1,050,000 - - - 1,050,000 1,050,000	Freehold property £ 12,278,363 24,375 17,724 12,320,462 5,019,973 406,568 5,426,541 6,893,921 7,258,390	Sports equipment £ 73,027 - - 73,027 40,390 6,055 46,445 26,582 32,637	School equipment £ 1,053,845 - 12,971 1,066,816 802,654 56,951 859,605 207,211 251,191	Fixtures and equipment £ 453,607 - - 453,607 337,938 27,114 365,052 88,555 115,669	Land £ 297,288 - - 297,288 - - - 297,288 297,288	Assets in the course of construction £ 29,937 43,212 (30,695) 42,454 - - - 42,454 29,937	Total £ 15,236,067 67,587 -
								15,303,654
								6,200,955 496,688
								6,697,643
								8,606,011
								9,035,112

Page 26

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

10. Tangible fixed assets (continued)

The bank holds a legal charge over the property in respect of the overdraft and loan facility.

New building work is classified as assets in the course of construction and transferred when the building comes into use. Refer to accounting policies 2.5 and 3 for information on depreciation and the investment property

11. Debtors

Due within one year Trade debtors Other debtors Prepayments	2024 £ 194,911 5,072 111,937 311,920	2023 £ 86,721 1,862 125,842

		214,425

12. Creditors: Amounts falling due within one year

Bank loans Pupil entry deposits Trade creditors Social security costs Other creditors Accruals Deferred income	2024 £ 313,633 530 49,659 100,185 86,768 128,013 1,372,986 2,051,774	2023 £ 309,738 500 132,671 94,302 74,346 72,565 779,099

		1,463,221

The bank loans are secured by a legal charge over Carswell Hourse, Carswell Manor and Rushey Cottage.

Page 27

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

13. Creditors: Amounts falling due after more than one year

Deferred income Bank loans Amounts owed to parents Included within the above are amounts falling due as follows: Between one and two years Deferred income Bank loans Pupil entry deposits Between two and five years Deferred income Bank loans Pupil entry deposits Over five years Bank loans Pupil entry deposits	2024 £ 707,660 3,427,233 235,750 4,370,643 2024 £ 414,100 332,340 20,000 293,560 1,024,602 94,065 2,070,291 121,685	2023 £ - 3,718,475 198,785

		3,917,260
		2023 £ - 324,468 33,120
		- 1,054,695 60,500
		2,339,312 105,165

The amounts stated above for 2024 for the bank loan are stated net of the management fee. The total unexpired management fees at 31 August 2024 amount to £13,750 (2023: £15,250) and is being amortised over the period of the loans.

One bank loan, being repaid over a 10 year period at a fixed interest rate of 3.473% finished this year. Two loans drawn down in 2020 are repayable over a 15 year period at a fixed rate of 3.8% and a variable rate of base +2.15%. One further loan was taken out in the year over a 5 year period at a fixed rate of 9.93%.

Page 28

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

Deferred income Deferred income at 1 September 2023 Fees received Fees released to surplus	2024 £ 779,099 2,080,646 (779,099) 2,080,646	2023 £ 785,466 779,099 (785,466)

		779,099

The deferred income relates to amounts paid to the school for up to the equivalent of XXXX years' tuition fees in advance. The money may be returned subject to specific conditions stated within the scheme literature.

14. Stocks

	2024	2023
	£	£
Stock	7,643	9,512

Page 29

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

15. Statement of funds

Statement of funds - current year

Unrestricted funds General Fund Restricted funds Cannon Classic Prize Friends of St Hugh's Helm Poetry Fund Professor McFarlane Prize Fund Paul Snow Memorial Prize Fund Total of funds	Balance at 1 September 2023 £ 4,223,146 157 4,074 296 153 11,527 16,207 4,239,353	Income £ 7,391,305 - 17,950 - - 206 18,156 7,409,461	Expenditure £ (7,518,600) - (14,755) - - - (14,755) (7,533,355)	Balance at 31 August 2024 £ 4,095,851
				157 7,269 296 153 11,733
				19,608
				4,115,459

The Cannon Classics Prize was set up by Derek Cannon, a former Headmaster, to provide an annual prize to a student studying classics.

Friends of St Hugh's raises funds for the school to provide items that would not usually be covered by day to day budgets.

The Helm Poetry Fund was provided by a parent to fund an annual poetry prize.

Professor McFarlane, a former Governor, set up a fund to provide an annual prize to a student studying French.

The Paul Snow Memorial Prize Fund is in memory of a former pupil. It exists to provide grants to other former pupils to help to fund worthwhile projects undertaken by them following secondary education.

Page 30

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

15. Statement of funds (continued)

Statement of funds - prior year

Unrestricted funds General Fund Restricted funds Cannon Classic Prize Friends of St Hugh's Helm Poetry Fund Professor McFarlane Prize Fund Paul Snow Memorial Prize Fund Total of funds	Balance at 1 September 2022 £ 4,468,189 157 3,744 296 153 11,527 15,877 4,484,066	Income £ 6,784,635 - 15,947 - - - 15,947 6,800,582	Expenditure £ (7,029,678) - (15,617) - - - (15,617) (7,045,295)	Balance at 31 August 2023 £ 4,223,146
				157 4,074 296 153 11,527
				16,207
				4,239,353

Page 31

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

16. Summary of funds

Summary of funds - current year

General funds Restricted funds Summary of funds - prior year General funds Restricted funds	Balance at 1 September 2023 £ 4,223,146 16,207 4,239,353 Balance at 1 September 2022 £ 4,468,189 15,877 4,484,066	Income £ 7,391,305 18,156 7,409,461 Income £ 6,784,635 15,947 6,800,582	Expenditure £ (7,518,600) (14,755) (7,533,355) Expenditure £ (7,029,678) (15,617) (7,045,295)	Balance at 31 August 2024 £ 4,095,851 19,608
				4,115,459
				Balance at 31 August 2023 £ 4,223,146 16,207
				4,239,353

17. Analysis of net assets between funds

Analysis of net assets between funds - current period

Unrestricted funds 2024 £ Tangible fixed assets 8,606,011 Current assets 1,912,257 Creditors due within one year (2,051,774) Creditors due in more than one year (4,370,643) Total 4,095,851	Restricted funds 2024 £ - 19,608 - - 19,608	Total funds 2024 £ 8,606,011 1,931,865 (2,051,774) (4,370,643)
		4,115,459

Page 32

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

17. Analysis of net assets between funds (continued)

Analysis of net assets between funds - prior period

Tangible fixed assets Current assets Creditors due within one year Creditors due in more than one year Total	Unrestricted funds 2023 £ 9,035,112 568,515 (1,463,221) (3,917,260) 4,223,146	Restricted funds 2023 £ - 16,207 - - 16,207	Total funds 2023 £ 9,035,112 584,722 (1,463,221) (3,917,260) 4,239,353

18. Pension costs

In September 2021 the school joined the Aviva Pension Trust for Independent School (“APTIS”) there were employer contributions to APTIS of £357,420 (2023: £335,374) .

Non-teaching staff are involved in the Standard Life Group Pension Plan, employer contributions in the year amounted to £120,813 (2023: £117,266) .

19. Capital commitments

Estimated capital commitment as at 31 August in respect of capital projects was £Nil (2023: £Nil) .

Page 33

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

20. Financial commitments

At the end of the year the following annual commitments existed in respect of non-cancellable maintenance and hire agreements:

Agreements expiring: In one year or less In more than one year but not more than two years In more than two years but not more than five years More than five years	2024 £ 166,956 151,450 253,925 - 572,331	2023 £ 186,971 67,976 91,442 -
		346,389

At the end of the year the following annual commitments existed in respect of non-cancellable other operating leases:

Land and Buildings Not later than 1 year Between 1-2 years Between 2-5 years Later than 5 years	2024 £ 10,754 10,754 23,300 - 44,808	2023 £ 10,754 10,754 32,262 1,792

		55,562

The following lease payments and changes in lease payments have been recognised in the Statement of Financial Activities:

Land and buildings Maintenance and hire agreements	2024 £ 10,754 206,853 217,607	2023 £ 14,827 189,573

		204,400

Page 34

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

21. Reconciliation of net movement in funds to net cash flow from operating activities

Net expenditure for the period (as per Statement of Financial Activities)
Adjustments for:
Depreciation charges
Investment income
Decrease/(increase) in stocks
(Increase)/decrease in debtors
Increase/(decrease) in creditors
Interest paid
Net cash provided by operating activities
22.
Analysis of cash and cash equivalents
Cash in hand
Total cash and cash equivalents
23.
Analysis of changes in net debt
At 1
September
2023
£
Cash at bank and in hand
360,785
Debt due within 1 year
(309,738)
Debt due after 1 year
(3,718,475)
(3,667,428)

2024
2023
£
£
(123,894)
(244,713)
496,688
520,602
(10,941)
(1,259)
1,869
(7,202)
(97,495)
(34,018)
1,329,283
59,812
208,141
174,281
1,803,651
467,503
2024
2023
£
£
1,612,302
360,785
1,612,302
360,785
Cash flows
At 31
August 2024
£
£
1,251,517
1,612,302
(3,895)
(313,633)
291,242
(3,427,233)
1,538,864
(2,128,564)

Page 35

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

24. Members' liability

Each member of the charitable company undertakes to contribute to the assets of the company in the event of it being wound up while he/she is a member, or within one year after he/she ceases to be a member, such amount as may be required, not exceeding £1 for the debts and liabilities contracted before he/she ceases to be a member.

25. Related party transactions

Close members of the SLT’s family are paid a total salary of £45,498 (2023: £33,529). All close relatives who are or have been employed by the school have a standard contract of employment, have been through a thorough interview process and their salaries are determined as part of a full staff salary review which is approved by the Governors.

Page 36

Registered number: 00913833 Charity number: 309640

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED (A Company Limited by Guarantee)

GOVERNORS' REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 AUGUST 2024

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

	Page
Reference and Administrative Details of the Charitable company, its Governors and	1 - 2
Advisers
Governors' Report	3 - 9
Governors' Responsibilities Statement	10
Independent Auditor's Report on the Financial Statements	11 - 14
Statement of Financial Activities	15
Balance Sheet	16
Statement of Cash Flows	17
Notes to the Financial Statements	18 - 36

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

REFERENCE AND ADMINISTRATIVE DETAILS OF THE CHARITABLE COMPANY, ITS GOVERNORS AND ADVISERS FOR THE YEAR ENDED 31 AUGUST 2024

Governors	Mr ND Lawson-Smith, Chairman1
	Mrs LA Chitty2
	Mrs A Coull2
	Mr S Cover1
	Mr C Davies, Chair of Welfare & Compliance Committee2
	Mrs J Forrest, Deputy Chair2,3
	Mrs V Gill, Chair of Finance & Estates Committee1,3
	Mr E Hayter1
	Mr G J Varney, Lead for Buildings & Estates1
	Mr A Wildman (retired 23 March 2024)1
	Mrs L Strange (appointed 24 June 2023)1
	Mr D Hatzis (appointed 23 March 2024)1
	Mrs N Sharff (appointed 23 March 2024)1
	Mrs P Johnson (retired 24 June 2024)
1 Member of the Finance and Estates Committee 2 Member of the Education Welfare & Compliance Committee 3 Member of the Nominations Committee Company registered number 00913833 Charity registered number 309640 Registered office Carswell Manor Faringdon Oxon SN7 8PT Bursar and company secretary Mr A Hamilton Headmaster Mr D Griffiths (appointed from 01/09/2023) Independent auditor Crowe U.K. LLP R+ Building 2 Blagrave Street Reading Berkshire RG1 1AZ Bankers Lloyds Bank Plc 82 Regent St Swindon SN1 1JZ

Page 1

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

REFERENCE AND ADMINISTRATIVE DETAILS OF THE CHARITABLE COMPANY, ITS GOVERNORS AND ADVISERS (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2024

Solicitors

Harrison Clark Rickerby's Ellenborough House Wellington Street Cheltenham GL50 1YD

Page 2

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

GOVERNORS' REPORT FOR THE YEAR ENDED 31 AUGUST 2024

REFERENCE & ADMINISTRATIVE INFORMATIO N

Governors

1 Member of the Finance and Estates Committee.

2 Member of the Education Welfare & Compliance Committee 3 Member of the Nominations Committee.

Key Executives

STRUCTURE, GOVERNANCE AND MANAGEMENT

Governing Document

The Company was governed by its Memorandum and Articles of Association dated 23 August 1967, up until the adoption of new Articles of Association on 2 March 2013.

Governing Body

The Governors are elected at a full Governors’ Meeting on the basis of recommendations received from other

Page 3

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

GOVERNORS' REPORT (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2024

Page 4

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

GOVERNORS' REPORT (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2024

Training

This year, the Governors have completed a range of AGBIS training sessions and St Hugh’s is one of the first schools to be awarded the AGBIS/HMC Certification for ‘Good Governance’

Organisational Management

Group structure and relationships

St Hugh’s benefits from the generosity of a thriving network of parents under the name of FOSH (Friends of St Hugh’s School) whose close support we greatly appreciate and gladly acknowledge.

AIM, OBJECTIVES, PRINCIPAL ACTIVITIES AND PUBLIC BENEFIT

Strategic Aim and Intended Effect

Page 5

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

GOVERNORS' REPORT (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2024

Objectives for the Year

The Board's main objectives continue to be

to educate all the School's pupils to a high standard so that they will be fully able to benefit from their chosen senior school for the completion of their education in due course
to develop further our bursary and other funding sources in order to increase the number of children entering the School from lower income families and
to continue to develop collaborative working with other charities and educational bodies.

Principal Activity

St Hugh’s principal activity continues to be the provision of a co-educational boarding and day school for children aged 3 to 13 years.

Volunteers

Page 6

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

GOVERNORS' REPORT (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2024

STRATEGIC REPORT

Achievements and performance Operational performance of the School

FOSH

Parents of the school run the “Friends of St Hugh’s” FOSH, with the objective of raising money for the benefit of the school and its pupils and other charities.

House Charities

St Hugh’s supports Four House Charities in Years 5-8.
Bickley House: Cancer Research UK
Carswell House: Yellow Submarine - Support for learning disabilities and autism in Oxfordshire
Chislehurst House: Big Step Forward (Pancreatic Cancer)
Malvern House: Blue Sky Thinking - Children’s brain tumour charity

Fundraising Events during the Year:

MacMillan Coffee morning, cakes made by and sold to staff.
Hello Yellow Day – Mental Health Awareness funded Young Minds
Harvest Festival collections. PP food collection went to Abingdon foodbank and MS/US collections to Faringdon and Wantage & Grove Foodbanks
Read-a-thon
Poppy sale in support of the Royal British Legion
Fireworks Display – funds raised for FOSH and Shelter
Children in Need– Cake sale in Pre-Prep and sale of Pudsey wrist bands
Christmas collection of children’s gifts under £10 for the Oxford Foodbank Christmas lunch
Christmas Fayre – funds raised for FOSH and the House Charities
Santa’s In a Box – sponsored fun run that raised money for Helen and Douglas House
Christmas concert at Radley College, donation made to Headway, Oxfordshire for use of chapel. Retiring collection raised funds for House Charities.
Nativity play retiring collection for House Charities.
Cauliflower Christmas cards sold for House Charities.
Year 8 painting auction raised funds for House Charities.
Quiz night – funds raised for FOSH.
Red Nose Day– children donated to wear a touch of red.
Pre-prep Cake Sale in aid of house charities

Page 7

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

GOVERNORS' REPORT (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2024

Big Toddle by Nursery in aid of Barnardo’s
Year 8 and FOSH Summer Fete – raised money for House Charities and FOSH
The Knight Frank Schools Triathlon with Restless Development at Marlborough College, everything raised between £50 and £100, by each team of 4 St Hughs Children, went to House Charities. Everything under £50 and over £100 went to the Restless Development Charity.
Sale of second-hand school clothing.

Local collaborations and partnerships:

The Mulberry Bush – Special school working with those made vulnerable by childhood trauma.

Chamber Choir performed in their Fundraising Concert in Bampton Church
Buckland School
A programme of free swimming lessons was provided.
Forest School facilities were provided for no charge.
Buckland Village
Use of the cricket fields and pavilion for annual fundraising cricket match
Oxfordshire Downs Cricket Club - Use of cricket pitches and pavilion

Youth challenge Oxfordshire - Free use of minibuses for weekends and holidays.

Donated sports kit including footballs for Asylum seekers in the area and local grassroots community clubs.

We do not carry out street fundraising, nor do we undertake fundraising mail shots or telephone canvassing.

Financial review

The market value of the School properties is in excess of book value and this is reviewed by the lead governor for Buildings and Estates, biannually.

Reserves Policy

All operating surpluses are invested in fixed assets and Teaching resources in order to ensure the continued development and viability of the School.

Page 8

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED (A Company Limited by Guarantee)

GOVERNORS' REPORT (CONTINUED) FOR THE YEAR ENDED 31 AUGUST 2024

Investment Policy

The School will endeavour to invest its cash surplus funds wisely and with a low-risk philosophy to ensure funds not immediately required attract an interest return.

Pay policy for senior staff

Future plans

Principal risks and uncertainties

Approved by order of the members of the board of Governors and signed on their behalf by:

Mr ND Lawson-Smith

(Chair of Trustees) Date:

Page 9

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

STATEMENT OF GOVERNORS' RESPONSIBILITIES FOR THE YEAR ENDED 31 AUGUST 2024

select suitable accounting policies and then apply them consistently;
observe the methods and principles of the Charities SORP (FRS 102);
make judgments and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards (FRS 102) have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charitable company will continue in business.

Approved by order of the members of the board of Governors and signed on its behalf by:

Mr ND Lawson-Smith (Chair of Trustees)

Date:

Page 10

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED (A Company Limited by Guarantee)

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

Opinion

In our opinion the financial statements:

give a true and fair view of the state of the charitable company's affairs as at 31 August 2024 and of its incoming resources and application of resources, including its income and expenditure for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Governors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Our responsibilities and the responsibilities of the Governors with respect to going concern are described in the relevant sections of this report.

Page 11

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED (A Company Limited by Guarantee)

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED (CONTINUED)

Other information

We have nothing to report in this regard.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

the information given in the Governors' Report including the Strategic Report for the financial year for which the financial statements are prepared is consistent with the financial statements.
the Governors' Report and the Strategic Report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which Companies Act 2006 requires us to report to you if, in our opinion:

adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of Governors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.

Responsibilities of governors

Page 12

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED (CONTINUED)

Auditor's responsibilities for the audit of the financial statements

Page 13

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED (CONTINUED)

Use of our report

THIS REPORT HAS NOT YET BEEN SIGNED

Alastair Lyon (Senior Statutory Auditor)

for and on behalf of Crowe U.K. LLP Statutory Auditor R+ Building 2 Blagrave Street Reading Berkshire RG1 1AZ

Date:

Page 14

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

STATEMENT OF FINANCIAL ACTIVITIES (INCORPORATING INCOME AND EXPENDITURE ACCOUNT) FOR THE YEAR ENDED 31 AUGUST 2024

Note Income from: Charitable activities: 4 School fee income Additional activities Other trading activities Investments Total income Expenditure on: Raising funds 6 Charitable activities 6 Total expenditure Net movement in funds Reconciliation of funds: Total funds brought forward Net movement in funds Total funds carried forward	Unrestricted funds 2024 £ 7,005,647 43,937 330,986 10,735 7,391,305 3,187 7,515,413 7,518,600 (127,295) 4,223,146 (127,295) 4,095,851	Restricted funds 2024 £ - - 17,950 206 18,156 14,755 - 14,755 3,401 16,207 3,401 19,608	Total funds 2024 £ 7,005,647 43,937 348,936 10,941 7,409,461 17,942 7,515,413 7,533,355 (123,894) 4,239,353 (123,894) 4,115,459	Total funds 2023 £ 6,467,555 42,872 288,896 1,259 6,800,582 24,380 7,020,915 7,045,295 (244,713) 4,484,066 (244,713) 4,239,353

The Statement of Financial Activities includes all gains and losses recognised in the year.

The notes on pages 18 to 36 form part of these financial statements.

Page 15

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED (A Company Limited by Guarantee) REGISTERED NUMBER: 00913833

BALANCE SHEET AS AT 31 AUGUST 2024

Note Fixed assets Tangible assets 10 Current assets Stocks 14 Debtors 11 Cash at bank and in hand Creditors: amounts falling due within one year 12 Net current liabilities Total assets less current liabilities Creditors: amounts falling due after more than one year 13 Total net assets Charity funds Restricted funds 15 Unrestricted funds 15 Total funds	7,643 311,920 1,612,302 1,931,865 (2,051,774)	2024 £ 8,606,011 8,606,011 (119,909) 8,486,102 (4,370,643) 4,115,459 19,608 4,095,851 4,115,459	9,512 214,425 360,785 584,722 (1,463,221)	2023 £ 9,035,112 9,035,112 (878,499) 8,156,613 (3,917,260) 4,239,353 16,207 4,223,146 4,239,353

The Governors acknowledge their responsibilities for complying with the requirements of the Act with respect to accounting records and preparation of financial statements.

The financial statements were approved and authorised for issue by the Governors on _______ and signed on their behalf by:

Mr ND Lawson-Smith

(Chair of Trustees)

The notes on pages 18 to 36 form part of these financial statements.

Page 16

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 AUGUST 2024

Note Cash flows from operating activities Net cash used in operating activities 21 Cash flows from investing activities Interest paid Net cash used in investing activities Cash flows from financing activities Cash inflows from new borrowing Repayments of borrowing Purchase of fixed assets Investment income Net cash used in financing activities Change in cash and cash equivalents in the year Cash and cash equivalents at the beginning of the year 22 Cash and cash equivalents at the end of the year 22	2024 £ 1,803,651 (208,141) (208,141) - (287,347) (67,587) 10,941 (343,993) 1,251,517 360,785 1,612,302	2023 £ 467,503 (174,281) (174,281) 303,000 (305,945) (310,259) 1,259 (311,945) (18,723) 379,508 360,785

The notes on pages 18 to 36 form part of these financial statements

Page 17

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED (A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

1. General information

The principal activity of the Charity is to advance the public benefit education by maintaining, managing and developing a school.

The financial statements are presented in Pounds Sterling as this is the functional currency of the economic environment in which the Charity operates.

Monetary amounts in these financial statements are rounded to the nearest £.

2. Accounting policies

2.1 Basis of preparation of financial statements

2.2 Going concern

2.3 Income

Registration fees and fees for additional activities are recognised as income in the year in which they are receivable.

Page 18

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED (A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

2. Accounting policies (continued)

2.4 Expenditure on buildings

All expenditure incurred on buildings is written off in the year in which it arises except where additional teaching or accommodation space is achieved, in which case it is capitalised.

2.5 Tangible fixed assets and depreciation

Fixed assets are included in the financial statements at cost, less accumulated depreciation. Individual assets costing more than £3,000 are capitalised.

Depreciation is charged so as to allocate the cost of tangible fixed assets less their residual value over their estimated useful lives, using the straight-line method.

Depreciation is provided on the following bases:

Freehold property	- Buildings are depreciated to their residual
	value over 25 years unless they have planning
	authority for a shorter period in which case they
	are depreciated over this shorter life.
Sports equipment	- 10%
School equipment	- 10% - 20%
Fixtures and equipment	- 10% - 33.3%

Assets in the course of construction (ACOC) are held at their actual cost as at the financial year-end and are not depreciated until they are complete and handed to the School for use.

2.6 Operating leases

Rentals paid under operating leases are charged to the Statement of Financial Activities on a straight-line basis over the lease term.

2.7 Stocks

Stocks are valued at the lower of cost and net realisable value.

2.8 Taxation

The Company is registered as a Charity and is entitled for the current year to the exemptions provided by Section 505 Income and Corporation Taxes Act 1988.

2.9 Value Added Tax

Page 19

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

2. Accounting policies (continued)

2.10 Pensions

The School has contributed to the Aviva Pension Trust for Independent Schools (APTIS) which is a defined contribution scheme.

The School also contributes to personal pension schemes for non-teaching staff and these contributions are accrued in the period to which they relate.

2.11 Allocation of costs to direct charitable and other expenditure

All expenditure is included on an accruals basis and is recognised when there is a legal or constructive obligation to do so.

Expenditure is summarised under functional headings either on a direct cost basis or, for overhead costs, apportioned according to management estimates of staff time spent.

Charitable activities include costs directly related to the running of the School.

Trading costs relate to the costs of goods sold.

Expenditure on charitable activities is incurred on directly undertaking the activities which further the charitable company's objectives, as well as any associated support costs.

2.12 Grants payable

Grants payable are charged as expenses in the year during which they are paid.

2.13 Fund accounting

Unrestricted funds are funds that can be used in accordance with the charitable objects at the discretion of the Governors.

Designated funds comprise unrestricted funds that have been set aside by the Governors for particular purposes.

Page 20

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

2. Accounting policies (continued)

2.14 Financing

Bank charges incurred in obtaining external debt finance are offset against the outstanding balance repayable over the periods of maturity.

2.15 Financial instruments

2.16 Cash at bank and in hand

3. Critical accounting estimates and areas of judgment

Critical accounting estimates and assumptions:

Page 21

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

4. Income from charitable activities

The income and surplus is attributable to the principal activity of running a preparatory school. The income all arose within the United Kingdom.

Unrestricted funds 2024 £ School fees 7,515,411 Less: Bursaries and allowances (509,764) Total net fees 7,005,647 Additional activities 43,936 7,049,583	Restricted funds 2024 £ - - - - -	Total funds 2024 £ 7,515,411 (509,764) 7,005,647 43,936 7,049,583	Total funds 2023 £ 6,912,304 (444,749)
			6,467,555 42,872
			6,510,427

5. Income from other trading activities

Unrestricted funds 2024 £ Income from fundraising events 19,912 Surcharge for late fees 6,292 Lettings and rents receivable 304,782 330,986	Restricted funds 2024 £ 17,950 - - 17,950	Total funds 2024 £ 37,862 6,292 304,782 348,936	Total funds 2023 £ 38,049 5,194 245,653
			288,896

Page 22

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

6. Expenditure

Generating funds: Fundraising costs Restricted expenditure Charitable activities: School operating costs: Teaching Welfare Premises Support costs Total expenditure	2024 £ 3,187 14,755 17,942 3,749,118 969,920 1,495,678 1,300,697 7,515,413 7,533,355	2023 £ 8,763 15,617
		24,380 3,573,752 880,154 1,362,118 1,204,891
		7,020,915
		7,045,295

Included in premises costs is a depreciation charge of £496,688 (2023: £520,602) .

7. Support costs

Salaries Office and other administration costs Finance costs Governance costs (see note 8)	2024 £ 517,966 434,221 245,845 102,665 1,300,697	2023 £ 495,111 438,518 191,261 80,001
		1,204,891

Finance costs include bank and loan interest paid of £208,141 (2023: £174,281) and bank loan charges released of £1,500 (2023: £4,622) .

Page 23

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

8. Governance costs

Auditor's remuneration - audit Governors training and expenses Professional, legal and consultancy fees Statutory inspection costs	2024 £ 25,528 1,045 71,236 4,856 102,665	2023 £ 20,918 265 55,788 3,030
		80,001

9. Staff costs

Wages and salaries Social security costs Contribution to defined contribution pension schemes	2024 £ 3,681,624 345,201 478,233 4,505,058	2023 £ 3,478,210 330,440 452,640

		4,261,290

The average number of persons employed by the charitable company during the year was as follows:

Teaching Non-teaching	2024 No. 86 38 124	2023 No. 86 36

		122

No compensation payments were made in the year to 31 August 2024 (2023: £58k).

No trustee received remuneration during the year (2023: £Nil) .

Four trustees incurred travel costs in the year of £935 (2023: £190) .

Trustees' indemnity insurance for cover of £2m cost £1,300 (2023: £1,300) .

In addition to staff employed directly by the School, 14 catering staff and 6 cleaning staff are employed under 2 sub-contracts. (2023: 14 catering and 6 cleaning staff under 2 sub contracts) .

The costs of the catering and cleaning contracts for the year were respectively £340,211 and £118,250 (2023: £284,681 and £108,952) .

Page 24

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

9. Staff costs (continued)

The number of employees whose employee benefits (excluding employer pension costs) exceeded £60,000 was:

	2024	2023
	No.	No.
In the band £60,001 - £70,000	4	3
In the band £70,001 - £80,000	2	-
In the band £90,001 - £100,000	1	2
In the band £140,001 - £150,000	1	-

The number of higher paid staff to which benefits were accruing under defined contribution pension schemes is 5 (2023: 4) . The contributions paid to this were £Nil (2023: £Nil ).

Page 25

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED (A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

10. Tangible fixed assets

Cost or valuation At 1 September 2023 Additions Transfers between classes At 31 August 2024 Depreciation At 1 September 2023 Charge for the year At 31 August 2024 Net book value At 31 August 2024 At 31 August 2023	Investment property £ 1,050,000 - - 1,050,000 - - - 1,050,000 1,050,000	Freehold property £ 12,278,363 24,375 17,724 12,320,462 5,019,973 406,568 5,426,541 6,893,921 7,258,390	Sports equipment £ 73,027 - - 73,027 40,390 6,055 46,445 26,582 32,637	School equipment £ 1,053,845 - 12,971 1,066,816 802,654 56,951 859,605 207,211 251,191	Fixtures and equipment £ 453,607 - - 453,607 337,938 27,114 365,052 88,555 115,669	Land £ 297,288 - - 297,288 - - - 297,288 297,288	Assets in the course of construction £ 29,937 43,212 (30,695) 42,454 - - - 42,454 29,937	Total £ 15,236,067 67,587 -
								15,303,654
								6,200,955 496,688
								6,697,643
								8,606,011
								9,035,112

Page 26

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

10. Tangible fixed assets (continued)

The bank holds a legal charge over the property in respect of the overdraft and loan facility.

11. Debtors

Due within one year Trade debtors Other debtors Prepayments	2024 £ 194,911 5,072 111,937 311,920	2023 £ 86,721 1,862 125,842

		214,425

12. Creditors: Amounts falling due within one year

Bank loans Pupil entry deposits Trade creditors Social security costs Other creditors Accruals Deferred income	2024 £ 313,633 530 49,659 100,185 86,768 128,013 1,372,986 2,051,774	2023 £ 309,738 500 132,671 94,302 74,346 72,565 779,099

		1,463,221

The bank loans are secured by a legal charge over Carswell Hourse, Carswell Manor and Rushey Cottage.

Page 27

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

13. Creditors: Amounts falling due after more than one year

Deferred income Bank loans Amounts owed to parents Included within the above are amounts falling due as follows: Between one and two years Deferred income Bank loans Pupil entry deposits Between two and five years Deferred income Bank loans Pupil entry deposits Over five years Bank loans Pupil entry deposits	2024 £ 707,660 3,427,233 235,750 4,370,643 2024 £ 414,100 332,340 20,000 293,560 1,024,602 94,065 2,070,291 121,685	2023 £ - 3,718,475 198,785

		3,917,260
		2023 £ - 324,468 33,120
		- 1,054,695 60,500
		2,339,312 105,165

Page 28

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

Deferred income Deferred income at 1 September 2023 Fees received Fees released to surplus	2024 £ 779,099 2,080,646 (779,099) 2,080,646	2023 £ 785,466 779,099 (785,466)

		779,099

14. Stocks

	2024	2023
	£	£
Stock	7,643	9,512

Page 29

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

15. Statement of funds

Statement of funds - current year

Unrestricted funds General Fund Restricted funds Cannon Classic Prize Friends of St Hugh's Helm Poetry Fund Professor McFarlane Prize Fund Paul Snow Memorial Prize Fund Total of funds	Balance at 1 September 2023 £ 4,223,146 157 4,074 296 153 11,527 16,207 4,239,353	Income £ 7,391,305 - 17,950 - - 206 18,156 7,409,461	Expenditure £ (7,518,600) - (14,755) - - - (14,755) (7,533,355)	Balance at 31 August 2024 £ 4,095,851
				157 7,269 296 153 11,733
				19,608
				4,115,459

The Cannon Classics Prize was set up by Derek Cannon, a former Headmaster, to provide an annual prize to a student studying classics.

Friends of St Hugh's raises funds for the school to provide items that would not usually be covered by day to day budgets.

The Helm Poetry Fund was provided by a parent to fund an annual poetry prize.

Professor McFarlane, a former Governor, set up a fund to provide an annual prize to a student studying French.

Page 30

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

15. Statement of funds (continued)

Statement of funds - prior year

Unrestricted funds General Fund Restricted funds Cannon Classic Prize Friends of St Hugh's Helm Poetry Fund Professor McFarlane Prize Fund Paul Snow Memorial Prize Fund Total of funds	Balance at 1 September 2022 £ 4,468,189 157 3,744 296 153 11,527 15,877 4,484,066	Income £ 6,784,635 - 15,947 - - - 15,947 6,800,582	Expenditure £ (7,029,678) - (15,617) - - - (15,617) (7,045,295)	Balance at 31 August 2023 £ 4,223,146
				157 4,074 296 153 11,527
				16,207
				4,239,353

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ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

16. Summary of funds

Summary of funds - current year

General funds Restricted funds Summary of funds - prior year General funds Restricted funds	Balance at 1 September 2023 £ 4,223,146 16,207 4,239,353 Balance at 1 September 2022 £ 4,468,189 15,877 4,484,066	Income £ 7,391,305 18,156 7,409,461 Income £ 6,784,635 15,947 6,800,582	Expenditure £ (7,518,600) (14,755) (7,533,355) Expenditure £ (7,029,678) (15,617) (7,045,295)	Balance at 31 August 2024 £ 4,095,851 19,608
				4,115,459
				Balance at 31 August 2023 £ 4,223,146 16,207
				4,239,353

17. Analysis of net assets between funds

Analysis of net assets between funds - current period

Unrestricted funds 2024 £ Tangible fixed assets 8,606,011 Current assets 1,912,257 Creditors due within one year (2,051,774) Creditors due in more than one year (4,370,643) Total 4,095,851	Restricted funds 2024 £ - 19,608 - - 19,608	Total funds 2024 £ 8,606,011 1,931,865 (2,051,774) (4,370,643)
		4,115,459

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ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

17. Analysis of net assets between funds (continued)

Analysis of net assets between funds - prior period

Tangible fixed assets Current assets Creditors due within one year Creditors due in more than one year Total	Unrestricted funds 2023 £ 9,035,112 568,515 (1,463,221) (3,917,260) 4,223,146	Restricted funds 2023 £ - 16,207 - - 16,207	Total funds 2023 £ 9,035,112 584,722 (1,463,221) (3,917,260) 4,239,353

18. Pension costs

In September 2021 the school joined the Aviva Pension Trust for Independent School (“APTIS”) there were employer contributions to APTIS of £357,420 (2023: £335,374) .

Non-teaching staff are involved in the Standard Life Group Pension Plan, employer contributions in the year amounted to £120,813 (2023: £117,266) .

19. Capital commitments

Estimated capital commitment as at 31 August in respect of capital projects was £Nil (2023: £Nil) .

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ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

20. Financial commitments

At the end of the year the following annual commitments existed in respect of non-cancellable maintenance and hire agreements:

Agreements expiring: In one year or less In more than one year but not more than two years In more than two years but not more than five years More than five years	2024 £ 166,956 151,450 253,925 - 572,331	2023 £ 186,971 67,976 91,442 -
		346,389

At the end of the year the following annual commitments existed in respect of non-cancellable other operating leases:

Land and Buildings Not later than 1 year Between 1-2 years Between 2-5 years Later than 5 years	2024 £ 10,754 10,754 23,300 - 44,808	2023 £ 10,754 10,754 32,262 1,792

		55,562

The following lease payments and changes in lease payments have been recognised in the Statement of Financial Activities:

Land and buildings Maintenance and hire agreements	2024 £ 10,754 206,853 217,607	2023 £ 14,827 189,573

		204,400

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ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

21. Reconciliation of net movement in funds to net cash flow from operating activities

Page 35

ST. HUGH'S SCHOOL (CARSWELL) TRUST LIMITED

(A Company Limited by Guarantee)

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2024

24. Members' liability

25. Related party transactions

Page 36

Smart decisions. Lasting Value

St. Hugh’s Schools (Carswell) Trust Limited Report to the Board of Governors Year ended 31 August 2024

January 2025

Strictly Private and Confidential

The Board of Governors, St. Hugh’s School, Carswell Manor, Faringdon, Oxon, SN7 8PT

Dear Members of The Board of Governors

I have pleasure in submitting our audit findings report for the year ended 31 August 2024. The primary purpose of this report is to communicate to the Committee and the Governors the significant findings arising from our audit that we believe are relevant to those charged with governance.

I look forward to discussing our report with you, as well as any further matters you may wish to raise with us, and I shall be attending the Finance and Administration Committee meeting on the 14 February 2025.

I would like to take this opportunity to express our appreciation for the assistance provided to us by the finance team and the other staff at the School during this year’s audit.

Yours sincerely

Alastair Lyon Partner

1. Executive summary ............................................................................................................................................................................................................................. 3
2. Significant audit risks .......................................................................................................................................................................................................................... 5
3. Other audit findings ............................................................................................................................................................................................................................. 6
4. Fraud and irregularities and our audit reporting ................................................................................................................................................................................ 10
5. Sector update .................................................................................................................................................................................................................................... 12
Appendix 1 - Reporting audit adjustments ......................................................................................................................................................................................... 15
Appendix 2 - Systems and controls ................................................................................................................................................................................................... 16
Appendix 3 - Materiality ..................................................................................................................................................................................................................... 21
Appendix 4 - Responsibilities and ethical standards ......................................................................................................................................................................... 22
Appendix 5 - Fraud risks .................................................................................................................................................................................................................... 24
Appendix 6 - External developments ................................................................................................................................................................................................. 26

1. Executive summary

Our report to you

We are pleased to present our Audit Findings Report to the Finance and Administration Committee and we welcome the opportunity to discuss our findings with you at your meeting on 14 February 2025.

The primary purpose of this report is to communicate to the Finance and Administration Committee and the Governors the significant findings arising from our audit that we believe are relevant to those charged with governance.

In accordance with International Standards on Auditing (UK) the matters in this report include

the results of our work on areas of significant audit risk

•	the results of our work on areas of significant audit risk	the results of our work on areas of significant audit risk	the results of our work on areas of significant audit risk
•	our views about significant qualitative aspects of the School’s accounting
	practices, including accounting policies, accounting estimates and
	financial statement disclosures
•	significant difficulties, if any, encountered during the audit
•	any significant matters arising during the	audit	and written
	representations we are requesting
•	unadjusted misstatement identified during the audit
•	circumstances that affect the form and content of our auditor’s report, if
	any
•	any other significant matters arising during the audit		that, in our
	professional judgment, are relevant to the oversight of		the financial
	reporting process

We have included comments in relation to the above where relevant in the subsequent sections of this report.

We also report to you any significant deficiencies in internal control identified during our audit which, in our professional judgment, are of sufficient importance to merit your attention.

Conclusions in relation to the areas of significant audit risk

As explained in our Audit Planning Report, in line with ISA (UK) 315 (Revised), we have considered the inherent risks, including the likelihood and magnitude of a potential misstatement.

In line with our audit plan we focussed our work on the significant audit risks identified:

Management override of controls

The results of our audit work in these areas is set out below:

Significant risk	Control deficiency	Adjustment(s)	Other reported matters
	identified	identified

Management override of controls			

Other audit findings

Section 3 sets out various comments on other important matters which we have identified from our audit.

Fraud and irregularities

Section 4 sets out the Governors and our responsibilities in respect of fraud and irregularities.

Audit materiality

The audit materiality for the financial statements set as part of our audit planning took account of the level of funds held by the School and was set at 2% of fixed assets. We have reviewed this level of materiality based on the draft financial statements for the year ended 31 August 2024 and are satisfied that it continues to be appropriate with 2% of fixed assets being £172k. Lower materiality will be applied to other areas of the Balance Sheet and SOFA.

Details of which can be found in Appendix 3.

Unadjusted misstatements

We report to you any unadjusted individual errors other than where we consider the amounts to be trivial, and for this purpose we have determined trivial to be 5% of our audit materiality.

We have listed in Appendix 1 the misstatements we have identified which have not been adjusted by management. The unadjusted errors would not result in an adjustment to the net income recorded in the Statement of Financial Activities and management have concluded that this is not material. We will be requesting confirmation from the Governors in our audit representation letter that you do not wish to adjust for these misstatements.

Audit completion and our Audit Report

We have substantially completed our audit in accordance with our Audit Planning Report which was sent to you and the senior management team on 12 August 2024, subject to the matters below.

We will report to you orally in respect of any modifications to the findings or opinions contained in this report that arise from progressing these outstanding matters.

On the satisfactory completion of these matters, we anticipate issuing an unmodified audit opinion on the truth and fairness of the 2024 financial statements.

Responsibilities and ethical standards

We have prepared this report taking account of the responsibilities of the Governors and ourselves set out in Appendix 5 of this report.

The matters included in this report have been discussed with the School’s management during our audit and at our closing meeting on 6 December 2024. Alistair Hamilton and Sarah Threadgold have seen a draft of this report and we have incorporated their comments and/or proposed actions where relevant.

Completion of the going concern and post-Balance Sheet events reviews.
Review of the final financial statements.
Receipt of the signed letter of representation.

2. Significant audit risks

As reported in our Audit Planning Report, ISA (UK) 315 (Revised) was applicable this year, and required us to consider a spectrum of inherent risk, considering both the likelihood and magnitude of a possible misstatement, with risks close to the upper end of the spectrum of inherent risk considered to be ‘significant risks’.

Risk is considered in the context of how, and the degree to which, inherent and control risk factors affect the likelihood and magnitude of a misstatement occurring. Such factors may be qualitative or quantitative, and include complexity, subjectivity, change, uncertainty or susceptibility to misstatement due to management bias or other fraud risk factors.

In addition, the auditing standards also set out a number of areas considered to always be a significant risk. Our audit response in respect of risks not identified as significant is set out in Section 3.

We have commented below on the results of our work in these areas as well as on any additional significant risks, judgements or other matters in relation to the financial statements of the School identified during our audit.

2.1 Management override of controls

Auditing standards require us to consider as a significant audit risk areas of potential or actual management override of controls. In completing our audit we have therefore considered the following matters.

Significant accounting estimates and judgements

ISA (UK) 540 (Revised) Auditing Accounting Estimates and Related Disclosures requires additional audit focus over management’s estimates, including undertaking separate risk assessments for both inherent and control risks. In respect of the former, consideration is given to the estimation uncertainty, the subjectivity and the complexity of the estimate. We are also required to consider whether the disclosures made in the financial statements are reasonable.

Management have made a number of necessary significant accounting estimates and judgements which impact the financial statements. We identified the following for specific audit review:

Valuation assumptions regarding investment property.

Other than the point raised in section 3.9, no issues were noted from the audit work carried out.

It is important that you are satisfied that the assumptions used by management are appropriate and we will ask you to provide a written representation to us to confirm this.

Controls around journal entries and the financial reporting process

We reviewed and carried out sample testing on the school’s controls around the processing of journal adjustments (how journals are initiated, authorised and processed) and the preparation of the annual financial statements. We also considered the risk of potential manipulation by journal entry to mask fraud.

We did not identify any instances of management override of controls or other issues from our sample testing of St Hugh’s school’s journals. However, we note that journal processing can be an area of potential risk and it is good practice to include consideration of this within the overall St Hugh’s School risk assessment.

Significant transactions outside the normal course of business

We are required to consider the impact on the financial statements if there are any significant transactions occurring outside of the normal course of the charity’s business.

No such transactions were notified to us by management, nor did any such transactions come to our attention during the course of our work.

Estimates and judgements that are not considered to be significant risks are set out in Section 3.

3. Other audit findings

In addition to matters relating to the significant audit risks as reported in Section 2, we have also noted the following matters from our audit work which we should bring to your attention.

3.1 Going concern

In preparing the financial statements to comply with Financial Reporting Standard 102 the Governors are required to assess the School’s ability to continue as a going concern.

In assessing whether the going concern assumption is appropriate, the Governors and management are required to consider all available information about the future of the School in the period of at least, but not limited to, twelve months from the date when the financial statements are approved and authorised for issue.

The Governors’ going concern assessment is a key area of emphasis and importance for our audit and, in accordance with the requirements of ISAs (UK), our audit report includes a specific reference to going concern.

Where trustees identify possible events or scenarios, other than those with a remote probability of occurring, that could lead to failure, then these should be disclosed in the financial statements.

Crowe response

Our work on going concern included the following:

reviewing the period used by Trustees to assess the ability of St Hugh’s School to continue as a going concern,
examining budgets and forecasts prepared by management covering the period of the going concern assessment to ensure that these appropriately support the trustees’ conclusion,
reviewing the accuracy of past budgets and forecasts by comparing the budget for the current year against actual results for the year, and
reviewing any other information or documentation which the Trustees have used in their going concern assessment.

Our conclusions and other comments

As at 31 August 2024 St Hugh’s School is reporting unrestricted funds totalling £4,096k (2023: £4,223k). St Hugh’s School’s unrestricted deficit for the year is £1,127k (2023: £246k deficit) leaving adequate reserves for future operations despite the deficit for the past three years. The cash balance at year end is £1,612k (2023: £262k).

We will be seeking representations that the Board has considered the forecasts and is satisfied that the going concern basis is appropriate.

We have included as Appendix 7 some further guidance on going concern which may be of help to the trustees.

3.2 Estimates and judgements

As noted in Section 2, management have made a number of necessary significant accounting estimates and judgements which impact the financial statements.

We identified the following non-significant estimates and judgements for specific audit review:

Assessment of impairment of assets.
Assessment of the remaining useful life of assets.
The assumptions relating to other income recognition and cut-off.

• Assessment of any other provisions; including bad debts. It is important that you are satisfied that the assumptions used by management are appropriate and we will ask you to provide a written representation to us to confirm this.

We found no evidence of asset impairment and determined that the depreciation rates employed by the College are in line with our expectations and the rest of the independent school sector.

Other than the point raised in Appendix 2, we did not identify any issues the other income recognition and cut-off.

We are not aware of any errors in provision.

3.3 Income

International Standards on Auditing (ISA (UK) 240) presumes there is always a significant risk of material misstatement due to fraud in revenue recognition, unless this is rebutted.

We do not consider any income streams to be significant as they can all be readily agreed to contracts and are not complex in nature, therefore allowing verification via a proof in total exercise. Income streams where this is not the case are immaterial.

Across all income streams the key risks remain the same:

Completeness (has all income due been appropriately recognised in the period?).
Cut off (has income been recognised in the appropriate period?).
Fund allocation (have donor restrictions on the use of the income been appropriately captured in the financial statements?).
Accuracy (where income is owed at year end, is it likely to be received or should it be provided against?).

Fee income

A significant income stream for The School is its pupil fees. This income amounted to £7m this year (2023: £6.5m). There are no significant judgements or estimates involved.

Lettings and rental income

The School’s other material income stream is it’s lettings and rental income. This was £305k in the current year (2023: £246k). There are no significant judgements or estimates involved in calculating this income.

Our audit work included the following:

Documenting the procedures used to capture, process and disclose lettings income.
Trace a sample of lettings income through from the booking confirmations log through to the nominal ledger and the bank.

No issues were noted from the audit work carried out.

3.4 Payroll

As discussed in our planning report, payroll is the largest single expenditure item for The School. As part of our audit work we carried out the following work:

Reviewed the controls in place over monthly processing, including the reconciliation of the payroll to the nominal ledger,
Performed analytical procedures that considered gross pay, deductions and staff numbers year on year to ensure that all trends and relationships appeared reasonable and that the totals agreed with the ledger.
Agreed with the ledger; and verified a sample of staff between the payroll and other HR records and agreed their costs to supporting documentation on a sample basis.

No issues were noted from the audit work carried out.

Our audit work included the following:

Documenting the procedures that you use to capture, process and disclose fees.
Performing a ‘Proof in Total’ on the income to ensure completeness.

No issues were noted from the audit work carried out.

3.5 Funds

The School operates a number of difference funds subject to various restrictions and designations. You must ensure that all movements on funds are correctly identified and accounted for. This requires careful consideration of the various terms and conditions which may be applied to income.

We:

Traced restricted contributions, legacies and grants found in our income testing to the relevant fund account.
Reviewed a sample of expenses allocated to restricted funds to ensure that the expenditure was reasonable.
Reviewed the processes in place to ensure that restricted transactions are completely and accurately captured and reported within the organisation. We also reviewed the year-end balances to ensure that they appropriately reflected the restrictions that should be in force.

No issues were noted from the audit work carried out.

3.6 Related parties

3.7 Report and Financial Statements

As noted in the Statement of Governors’ Responsibilities, the Governors are responsible for preparing the Governors’ Annual Report and the financial statements in accordance with applicable law and United Kingdom Generally Accepted Accounting Practice.

3.8 Risk register/ plan

As part of our audit we reviewed the Risk Register for consideration around the risk of fraud. Other than ‘Cyber’ and ‘Loss of property’ there was no other areas of fraud mentioned.

We would recommend that section 4 and Appendix 5 are reviewed and addition considerations are added to the register/plan.

3.9 Valuation of investment property - MEMO

The Zoopla valuation report received notes that the value of the properties in the area to be between £1,040,000 to £1,270,000. The Investment property is valued at £1,050,000 (2023: £1,050,000) in the financial statement at 31 August 2024.

In line with the ISAs which direct our audit work (ISA (UK) 550) we are obliged to ensure that any related parties are identified and that any transactions involving these parties and The School are appropriately authorised and correctly disclosed in the financial statements. The definition of a “related party” as defined in FRS 102 encompasses, in addition to the Board of Governors any members of management who can directly influence management decisions and close family members of both; the latter being of relevance if individual Board of Governors and members of management are perceived to be in a position to influence the management decisions of family members or can be influenced by them.

We therefore reviewed The School’s procedures for identifying potential related parties and ensuring all transactions are complete, including any annual declaration of interests completed by the Board of Governors, and Senior Management.

No issues were noted from the audit work carried out.

3.10 IT user access and password control - MEMO

We reviewed The school’s IT environment in more detail this year. This involved;

gaining a deeper understanding of how finance related systems communicate with each other and risk assessing the connections in terms of impact on our audit; and
understanding the day-to -day use of these platforms including back up procedures; and
documenting and walking through who has administration rights over these systems to ensure administrator access is appropriate to the business user of the system; and

Passwords

As part of our work looking at passwords we looked at best practice and compared this against the policies involved in the school. We specifically looked at systems PASS (finance system), Windows (domain) and Lloyds (bank). Although in a number of areas management were unable to provide details of the password criteria we consider the overall risk around passwords low as there are processes in place to mitigate the risk, such as having multifactor authentication on user devices.

Other than the above comment no other issues were noted from the audit work carried out

understanding how passwords are used/ monitored

Administration rights

During our audit, we reviewed who has administrator rights for the accounting system and other systems used and therefore who is able to perform critical actions such as creating, deleting, modifying user access, and altering system configurations.

We noted that members of the finance team were administrators for the accounting systems (PASS and for the Lloyds bank accounts) and therefore there is the potential that all users can configure the underlying data, bypass any system controls. As a result, there is a lack of segregation. This is not uncommon for a small accounts team, and we have seen it frequently amongst our other clients.

We would recommend that where possible you segregate the administrator access from business users. This being said, we consider this risk to be low as some mitigating control exist such are dual authorisation of bank payment/changes to bank settings, as well as Journal reviews and authorisation in the finance function.

4. Fraud and irregularities and our audit reporting

Audit reporting on detecting irregularities, including fraud

In line with ISA (UK) 700 our audit report includes an additional comment to explain to what extent the audit was considered capable of detecting irregularities, including fraud.

Irregularities are acts of omission or commission which are contrary to the prevailing laws or regulations. Fraud includes both fraudulent financial reporting and misstatements resulting from misappropriation of assets.

Our responsibility is to obtain reasonable assurance that the financial statements taken as a whole are free from material misstatement, whether caused by fraud or error. The additional reporting requirements this year placed increased emphasis on our understanding of the risks to School from fraud and irregularities. Our audit included discussions with management and those charged with governance to obtain their assessment of the risk that fraud may cause a significant account balance to be materially misstated as well as other procedures to obtain sufficient appropriate audit evidence.

We obtained an understanding of the legal and regulatory frameworks within which the School operates, focusing on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. The laws and regulations we considered in this context were the Charities Act 2011 together with the Charities SORP (FRS102). We assessed the required compliance with these laws and regulations as part of our audit procedures on the related financial statement items.

In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which might be fundamental to the School’s ability to operate or to avoid a material penalty. We also considered the opportunities and incentives that may exist within the School and the group for fraud. The laws and regulations we considered in this context for the UK operations were General Data Protection Regulation and health and safety legislation.

posting of journals, reviewing accounting estimates for biases, reviewing regulatory correspondence with the Charity Commission, and reading minutes of meetings of those charged with governance.

In accordance with International Auditing Standards, we planned our audit so that we have a reasonable expectation of detecting material misstatements in the financial statements or accounting records including any material misstatements resulting from fraud, error or non-compliance with law or regulations.

However, owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements of the financial statements may not be detected even though the audit is properly planned and performed in accordance with the ISAs (UK). No internal control structure, no matter how effective, can eliminate the possibility that errors or irregularities may occur and remain undetected. In addition, because we use selective testing in our audit, we cannot guarantee that errors or irregularities, if present, will be detected. Accordingly, our audit should not be relied upon to disclose all such misstatements or frauds, errors or instances of non-compliance as may exist.

We have also included in Appendix 5 some fraud risks that Governors and management should be aware of.

Governors responsibilities

The primary responsibility for safeguarding the School’s assets and for the prevention and detection of both irregularities and fraud rests with the Governors and management of the organisation. It is important that management, with oversight of those charged with governance, place a strong emphasis on fraud prevention and fraud deterrence. This involves a commitment to creating a culture of honest and ethical behaviours which can be reinforced by an active oversight by those charged with governance.

As in past years, the following statements will be included in the letter of representation which we require from the Governors when the financial statements are approved.

The Governors acknowledge their responsibility for the design, implementation and maintenance of internal control to prevent and

detect fraud and errors, and the Governors believe they have fulfilled those responsibilities.

The Governors have assessed that there is no significant risk that the financial statements are materially misstated as a result of fraud.
The Governors are not aware of any fraud or suspected fraud affecting the School involving management, those charged with governance or employees who have a significant role in internal control or who could have a material effect on the financial statements.
The Governors are not aware of any allegations by employees, former employees, regulators or others of fraud, or suspected fraud, affecting the School’s financial statements.

We have not been made aware of any actual or potential frauds which could affect the 2024 financial statements, or in the period since the previous year end.

5. Sector update

Independent schools continue to form an intrinsic part of the education system in the UK, providing education and wider opportunities for pupils and their connected communities. The sector has shown remarkable resilience through what remains a challenging period. Schools continue to show they are adaptable and resourceful in the face of a challenging environment characterised by rising costs and political uncertainty. Schools are meeting these challenges head on as they prepare for the introduction of VAT on fees, loss of Business rates relief and an uncertain economic environment.

Pupil numbers

Political change and challenging economic conditions have started to show an impact on pupil recruitment and retention in 2024. The Independent Schools Council reported a 2.7% decrease in new pupil recruitment as parents reflect on long-term affordability in the current environment. This has led to the total proportion of children educated in independent schools falling from 7% to 6% in 2024.

Whilst the overall trend shows a decline across the year, there is wide regional variation in this fall with the South West, East Midlands, Scotland and Wales seeing between 0.9% and 2.1% declines in 2024. This was offset by rising pupil numbers in the North East, London, West Midlands and South Central regions which showed between 0.1% and 0.6% growth in the period. Pupil growth in the South East remained flat with 0% growth in pupil numbers reported.

2024 has also seen an 8% increase in the number of independent school children receiving SEND support which equates to 1 in 5 of all pupils.

Fee increases, affordability and knowing your market

Governing bodies have the unenviable task of setting an appropriate fee increase when many families have already had to make significant sacrifices due to wider economic pressure on disposable incomes throughout the cost of living crisis.

It is imperative that schools make sure they are covering costs through appropriate fee increases. This cannot be recovered later through further rises, and resulting deficits on operating activities are not sustainable in the long-term for most schools.

Operational costs across the sector, and indeed the cost of living for parents, remain high. Whilst current inflation has now moved closer to the Bank of England target rate, costs remain high and real incomes for parents have yet to catch up.

Whilst there is an element of expectation from parents that fees in the year ahead will be higher to accommodate the introduction of VAT, Governors and senior management continue to face a difficult balancing act. They must consider how much of the increased costs can be passed on, particularly as many schools are already operating with a tight budget. Nevertheless, schools are ensuring that fees are being set at a level to sufficiently address the current challenges and to continue investing in the future.

March/April 2023 was around the time when many schools settled on fee increases for the following year. During this period CPI inflation was at 8.7% and interest rates, at 4.25%, were continuing to rise. At this time the there was also uncertainty around the final increase expected for those in the Teachers’ Pension Scheme. This had a direct impact on costs for schools. In response, schools continued to work hard to control fee increases. The Independent Schools Council reported that the annual average fee increase in 2024, was 8% which is similar to underlying wage inflation reported by the Government for the same period (7.8%), suggesting a small increase in real terms. This compares to a 5.6% increase in in fees during 2023 and 3% increase in 2022.

These increases reflect the harsh realities at many schools who continue to offer a full curriculum and extra-curricular activities in a challenging macro environment.

Looking ahead, much larger increases are likely as schools look to pass on VAT and other costs which they cannot absorb within their operating models.

Affordability remains central to any decision on fee increases and schools have continued to extend the level of assistance offered to pupils, to minimise the financial burden for those who require additional financial support.

Total fee assistance provided by independent schools increased by 10.2% in 2024 (2023: 5.9%). This includes increasing the value of the average meanstested bursary by 9.3% (2023: 8.9%) across the period.

Settling on a sustainable assistance programme continues to be a critical success factor for many independent schools, as they consider the financial cost of maintaining expensive concessions against the risk of pricing parents out of the market without an effective bursary and scholarships programme.

Many schools are also increasing the level of activities which deliver other forms of public benefit which adds additional cost to operations, so Governors are continuing to revisit concessions policies to ensure they remain sustainable.

In response to increased costs both now and on the horizon, parents are increasingly re-considering entry points for independent education, many waiting until year 7 and taking a cheaper option of tutoring their children for entrance exams through junior education. This is creating several pressures on both prep schools and other entry points within schools.

Knowing your local market is therefore critical to getting the strategic planning right for your school. Some essential questions for the Board and senior leadership team to consider:

Where is the local competition?
What is everyone else charging?,
What are others offering in terms of education and extras?

Whilst these circumstances are challenging schools are taking the opportunity to examine catchment areas, local demographics and even bus routes to ensure offers to pupils continue to appeal within a changing marketplace.

Public benefit

Delivering wider public benefit continues to be an important mechanism for independent schools to build community engagement and share knowledge, facilities, and other assets with the state sector.

The Independent Schools Council saw a 5.2% increase in the number of reported partnerships with the state sector in 2024, covering a diverse range of activities from sharing facilities to seconding staff.

It is important that examples of public benefit are articulated effectively in the financial statements. Consideration is needed around the messaging and how this is presented. Where a school is particularly active in its public benefit provision, the use of a Chairman’s Statement or infographics at the start of the Trustees Report may help to highlight key achievements. In times where a school is involved in longer term collaborations and provisions, they may also

wish to look at impact reporting to evidence the longer-term outcomes that their involvement has helped to achieve.

Political risks and taxation

The recent change in Government has crystalised political risks surrounding the introduction of VAT from January 2025 and removal of Business rates relief from April 2025.

No one can predict with certainty how this will play out and until consultations are over and final legislation is in place, it is impossible to understand the full impact on individual schools.

Schools are now working through the financial implications of these changes and are evaluating the risks to business and parents which might follow.

Ensuring good fiscal discipline around budgets and costs centres or developing new income streams will help cushion the residual pain.

VAT

Following the election of the Labour Party, the Government has begun the process of removing the VAT exemption from independent schools.

With no draft legislation the picture remains unclear, however there are a number of actions that schools can take to plan ahead that are detailed here.

Below we share some considerations that we have been discussing with schools over the past year. These actions and considerations will help independent schools to prepare should the changes be introduced in 2025.

Will independent schools need to register for VAT?

Many independent schools are not currently registered for VAT. The limit for VAT registration is £90,000 of taxable supplies over a rolling 12-month period, therefore it is highly likely schools will need to register for VAT shortly after the changes in legislation become effective.

The application process is online and should be straight forward, but we already experience delays in processing with HMRC and sometimes questions asked are not entirely clear. HMRC do apply penalties for taxpayers that notify them belatedly, so the key message is to ensure you are prepared and the application is sent promptly.

How / when do I account for VAT on income received?

For taxable supplies VAT generally falls due on the earlier of:

the issue of a VAT invoice; or
payment for the service.

Consequently, if a VAT invoice is raised and payment is not made promptly, the school may have to pay HMRC the VAT before it is received from the parents. This could potentially cause a cashflow issue, so it is important that schools manage this risk carefully.

(Please note that currently invoicing does not create a tax-point as the supplies are VAT exempt).

How do I recover VAT on costs?

Currently, even VAT-registered schools face heavy restrictions on the amounts of VAT that can be recovered on costs because supplies of education are exempt. Therefore, it is likely many VAT-registered schools often do not record VAT on purchases. In a world with VAT on school fees, these systems must be changed to ensure VAT is identified on costs that bear the tax, so this can be offset against the VAT due on the VAT return. It is equally important that invoices are retained to support the recovery of VAT on those costs.

Can I recover VAT on costs retrospectively?

The only opportunity for schools to retrospectively recover VAT is on ‘capital items’ that fall under the ‘Capital Goods Scheme’. For schools, these are usually VAT-bearing building projects that cost in excess of £300,000 (inclusive of VAT).

VAT can be recovered for such items that have been used in the past 10 years. However, please note that for each year of use under current rules, one-tenth of the VAT claim is lost. For more information on how the Capital Goods Scheme works, you can watch our webinar here. We would recommend that schools begin identifying any Capital Goods Scheme assets and retain invoices to support their claims.

The rules for newly VAT-registered businesses usually allow for recovery of VAT on goods ‘on hand’ going back four years, with services being recoverable six months prior to the effective date of VAT registration. However, in most instances, this will not be the case for schools, as the goods and services will have already been used to make exempt supplies.

How do I submit a VAT return?

VAT returns are usually submitted to HMRC on a quarterly basis, with returns falling due one month and seven days after the end of a particular quarter (e.g. the March VAT return would be due by submission by 7 May).

Under ‘Making Tax Digital’ (MTD), VAT returns must be submitted electronically using MTD compliant software to share the figures with HMRC. Independent schools need to ensure that systems are updated where necessary to accommodate this extra compliance task.

It is important to note that whilst your current system may be able to submit a VAT return under MTD, it might not be able to make the adjustments required (e.g. partial exemption and non-business restrictions). Therefore, other solutions may need to be looked into; there are many excel based offerings that offer a low cost and functional solution.

Our latest thinking on VAT and schools can be viewed through the link below. VAT on school fees update | Crowe UK

Fees in advance schemes

Fees in advance schemes are not new to the sector and many schools have had them in place for some time. Risks surrounding the introduction of VAT prior to the change in Government led to increased numbers of parents wishing to make advance payments on the understanding that this might reduce (though not eliminate) their exposure to VAT. This was on the understanding that payments received in advance of the announcement to change legislation for supplies of education in future, may not be subject to VAT as the tax point on fee invoices is the payment date rather than invoice date.

Since the introduction of VAT was announced on 29 July 2024, HMRC have suggested that in some circumstances they may challenge the VAT treatment of advance payments, and the terms and conditions of the pre-payments will determine whether there has been a tax point. They have also confirmed that any payments received after the announcement will be subject to VAT.

We have worked closely with ISBA during the year on the development of resources which will assist schools in introducing new schemes, implementing changes to existing schemes and communication with parents and these are available to ISBA members through their website.

Our latest guidance on advance school fees can be found at Fees in advance schemes | Crowe UK

Appendix 1 - Reporting audit adjustments

Unadjusted misstatements

International Standards on Auditing (UK) require that we report to you all misstatements which we identified as a result of the audit process but which were not adjusted by management, unless those matters are clearly trivial in size or nature.

The following misstatements were identified during our audit work and up to the date of this report have not been adjusted in the draft financial statements. We have summarised below the potential overall impact of these items on the financial statements.

Adjustment description	Increased/ (Decrease) net income £k	Increased/ (Decrease)net assets £k	Increased/ (Decrease)opening reserves £k
Presentational adjustment relating to Accruals Trade Creditor	-	(26) 26	-

Adjusted misstatements

The following misstatements, which have been corrected by management, were also identified during our audit work and up to the date of this report. No further adjustments to the financial statements are required for these items and this information is provided to assist you in understanding the financial statements completion process and to fulfil your governance responsibilities.

Adjustment description	Increased/ (Decrease) net income £k	Increased/ (Decrease) net assets £k	Increased/ (Decrease) opening reserves £k
Increase bad debt provision	(18,353)	(18,353)	-

Appendix 2 - Systems and controls

We have set out below certain potential improvements to the School’s processes and controls which we noted during our audit work and which we believe merit being reported to you.

Our evaluation of the systems of control at the School was carried out for the purposes of our audit and accordingly it is not intended to be a comprehensive review of your business processes. It would not necessarily reveal all weaknesses in accounting practice or internal controls which a special investigation might highlight, nor irregularities or errors not material in relation to the financial statements.

In order to provide you with a clearer picture of the significance of issues raised, we have graded the issues raised by significance/priority before any corrective actions are taken: We have also included below a brief update on the matters we raised last year.

High These findings are significant and require urgent action. (no comments in this category) Medium These findings are of a less urgent nature, but still require reasonably prompt action. (one comment in this category) Low These findings merit attention within an agreed timescale. (three comments in this category) Audit finding and recommendation Priority Management response 1. Authorisation of expenses Upon review of a council tax rates invoice, there was no visible signature of approval We will keep a copy of the original invoice and counter suggesting a potential lack in control on invoice authorisation. Although the original invoice sign monthly instalments. would have been approved, the individual payments should be agreed back to this document. We would recommend that moving forward this check/review be evidenced as taken place. 2. Bad debt provision The current provision appears to be a general provision for £10,000. After discussing with Debt provision is always an estimate in advance but management it was noted that the item related to a rounded amount relating to a specific debt we will adjust this to exact amounts for the accounts of £7,500. in future. All debtors are reviewed as part of the routine F&E committee. The remaining long term In addition to this, it was identified that the was a number of additional potential bad debts not debtors are in a legal process that are more likely to provided for yet. After discussion with the management it was decided that some of these be settled. identified debts were in a position to be provided for at the year end and that management were still in discussions with other. See appendix 1 for details.

We would recommend a regular review of old and potential bad debt be carried out and the provisions updated in accordance with these reviews.

3. CC8 Checklist

It is good practice that the CC8 checklist be completed annually and reviewed by governors. We found during the audit that this was not the case.

We would recommend that governor’s request that management complete the CC8 checklist on an annual basis. This would provide assurance to the governors there has been no significant weakening of the internal financial controls.

Noted – these checks are assured in separate processes, but this will now be reviewed annually in F&E.

We have set out below the systems and control issues on which we reported after our audit last year together with an update on how the points raised have been addressed including information on the progress made at the time of the audit of the 2024 financial statements.

Status		Priority
Recommendation fully implemented or no longer relevant		These findings merit attention within an agreed timescale.
Recommendation partially implemented		These findings are of a less urgent nature, but still require reasonably prompt action.
These findings merit attention within an agreed timescale.		These findings are significant and require urgent action.

Observations and recommendations in 2023 or prior periods 4. Payroll – contract changes and incorrect pay rise letters We noted a difference between the contract value and the first month’s pay for one employee. After discussion with finance staff this was because a 5% pay rise had been agreed after the initial contract had been issued which had seemingly not been reflected. This creates a documentation control issue.

We would recommend that employee contracts are reviewed and it is clearly documented in the contracts whether pay rises will be applied and what the final contract value should be. It is then additionally recommended to ensure that the employee is being paid in line with their contract.

Additionally in respect of payroll, a pay rise letter was issued for the wrong T grade. A new letter was then drafted but not issued or signed. We have therefore had to seek alternative documentation to agree this individual’s payroll to payroll reports Care should be taken with pay rise letters and we would recommend that these are reviewed before being issued. Where errors do arise, it should be ensured that updated letters are issued and that the individual in question has received these.

2023 management response

Pay letters will be sent to all staff including new joiners in order that the September pay rise is documented

	Priority	Status	Update 2024
			No issues were identified this year, therefore we now
			consider this matter closed

Observations and recommendations in 2023 or prior periods

5. Bursaries documentation

For both bursary samples chosen, we have been unable to agree them to approval documentation. For one sample, there was a 100% discount applied but no documented approval of the discount. For another sample, a staff members discount for their child was agreed as part of their recruitment but there is no mention of the discount in their contract or formal approval. For all discounts provided as part of the bursaries, there should be formal documentation in place with clear approval of the discounts.

2023 management response

Priority Status Update 2024 Both of these are bursaries applied to staff and did not follow the normal process – future arrangements to be recorded in writing.
a. although means tested, we did not complete the full process – the member of staff had become divorced (partner had lost job) and required full support for the child to remain in school.
b. The second was negotiated discount as part of pay and benefit negotiation to match previous employment.

We will ensure that there is complete documentation in the future.

6. Fees in advance

As part of the fees in advance calculation there is an amount deducted (£67k this year) that relates to ‘Extras’ that are raised in arrears. This deduction is based on all extras for all pupils. In reality this is not the case as not all extras will have been paid before the year end. This is therefore resulting in the fees in advance figure being a balancing figure. We also note that the £67k this year comprises of £96k of extras and £29k of deposits. Although not material this year, this could be in future years. We would recommend that when calculating the fees in advance that only pupil extras paid by parent at the yearend be deducted. 2023 management response In future, pupil extras will be analysed out by billing account so that we can see who has paid

We can see that this element of extras is now being identified and correctly allocated. We therefore consider this matter closed

Observations and recommendations in 2023 or prior periods

7. Bank reconciliations details

The school performs bank reconciliations on all bank accounts held.

We would however like to highlight that the Deposit accounts are only reconciled annually. This means that any unusual activity on the accounts could go undetected for several months or more. We also note that the annual reconciliation provided did not have any evidence of review as well as not showing sufficient detail for reconciliation purposes.

Priority Status Update 2024 Support has been provided that show regular bank reconciliations for all bank accounts. We therefore consider this matter closed

2023 update

We have noted that bank reconciliations are still not regularly carried out on all bank accounts. Additionally review is not undertaken for all bank reconciliations completed.

Appendix 3 - Materiality

Materiality and identified misstatements

As we explained in our Audit Planning Report, we do not seek to certify that the financial statements are 100% correct; rather we use the concept of “materiality” to plan our sample sizes and also to decide whether any errors or misstatements discovered during the audit (by you or us) require adjustment. The assessment of materiality is a matter of professional judgement but overall a matter is material if its omission or misstatement would reasonably influence the economic decisions of a user of the financial statements.

Our overall audit materiality for the financial statements as a whole took account of the level of funds held by School and was set at approximately 2% of fixed assets. A lower materiality will be set for sampling purposes and will be capped at 2% income.

We reassessed materiality based on the draft financial statements, and the following is a summary of the overall materiality levels we applied to the separate entities within the group.

Entity	Materiality calculation	Planning Materiality £’000	Final Materiality £’000	Reporting threshold £’000
For fixed assets	2% of fixed assets	180	172	8.6
For all other balance sheet and SOFA items.	2% of income	140	148	7.4

Appendix 4 - Responsibilities and ethical standards

Audit purpose and approach

Our audit work has been undertaken for the purposes of forming our audit opinion on the financial statements of the School prepared by management with the oversight of the Governors and has been carried out in accordance with International Standards on Auditing (UK) (‘ISAs’).

Our work combined substantive procedures (involving the direct verification of transactions and balances on a test basis and including obtaining confirmations from third parties where we considered this to be necessary) with a review of certain of your financial systems and controls where we considered that these were relevant to our audit.

Financial statements

The Governors of the School are responsible for the preparation of the financial statements on a going concern basis (unless this basis is inappropriate). The Governors are also responsible for ensuring that the financial statements give a true and fair view, that the process your management go through to arrive at the necessary estimates or judgements is appropriate, and that any disclosure on going concern is clear, balanced and proportionate.

Legal and regulatory disclosure requirements

In undertaking our audit work we considered compliance with the following legal and regulatory disclosure requirements, where relevant.

Companies Act 2006
Charities Act 2011
The Charities (Accounts and Reports) Regulations 2008 (or updated Regulations if enacted before completion of the financial statements)
Financial Reporting Standard 102 (FRS 102)
The Charities SORP (FRS 102)

Governors’ responsibilities

Under the provisions of the Companies Act, the Governors’ Report is required to include a statement confirming for each director who was a director at the time of the approval of the financial statements that:

they have each taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company’s auditor is aware of that information; and
so far as they are aware there is no relevant audit information of which the company’s auditor is unaware.

Ethical Standard

We are required by the Ethical Standard for auditors issued by the Financial Reporting Council (‘FRC’) to inform you of all significant facts and matters that may bear upon the integrity, objectivity and independence of our firm.

Crowe U.K. LLP has procedures in place to ensure that its partners and professional staff comply with both the relevant Ethical Standard for auditors and the Code of Ethics adopted by The Institute of Chartered Accountants in England and Wales.

As explained in our audit planning report, in our professional judgement there are no relationships between Crowe U.K. LLP and School or other matters that would compromise the integrity, objectivity and independence of our firm or of the audit partner and audit staff. We are not aware of any further developments which should be brought to your attention.

Independence

International Standards on Auditing (UK) require that we keep you informed of our assessment of our independence.

We confirm that we have not provided any non-audit services to the School. We have not identified any other issues with regards to integrity, objectivity and independence and, accordingly, we remain independent for audit purposes.

The matters in this report are as understood by us as at November. We will advise you of any changes in our understanding, if any, during our meeting prior to the financial statements being approved.

Use of this report

This report has been provided to the Finance and Administration Committee to consider and ratify on behalf of the Board of Governors, in line with your governance structure. We accept no duty, responsibility or liability to any other parties, since this report has not been prepared, and is not intended, for any other purpose. It should not be made available to any other parties without our prior written consent.

Appendix 5 - Fraud risks

As part of our audit procedures we make enquiries of management to obtain their assessment of the risk that fraud may cause a significant account balance to contain a material misstatement. However, we emphasise that the responsibility to make and consider your own assessment rests with yourselves and that the Governors, Audit and Risk Committee and management should ensure that these matters are considered and reviewed on a regular basis.

Usually fraud in the School sector is not carried out by falsifying the financial statements. Falsifying statutory financial statements usually provides little financial benefit, as compared to say a plc where showing a higher profit could lead to artificial share prices or unearned bonuses. However, falsifying financial statements can be used to permit a fraud or to avoid detection. As a generality, charities represented by its management and its Governors do not actively try to falsify financial statements as there are not the same incentives to do so. In the School world fraud is usually carried out through misappropriation or theft.

The Governors should be aware that the Charity Commission provides guidance (updated in September 2022) on how to protect your School from fraud including information about fraud, how to spot it and what you can do to protect against it.

The Charity Commission’s first guiding principle recognises that fraud will always happen. It is therefore important that, as part of setting their overall risk appetite, the Governors consider fraud within their tolerance for the risks associated with the management of the organisation’s (and group’s) funds. The development and continued assurance of a robust counter fraud control framework should then contribute to the organisation matching the risk appetite and tolerance agreed by the Governors.

A copy of our guidance and a framework on conducting fraud risk assessments can be obtained from our website here:

https://www.crowe.com/uk/insights/fraud-risk-assessment-non-profit.

A fraud risk assessment is an objective review of the fraud risks facing an organisation to ensure they are fully identified and understood. This includes ensuring:

fit for purpose counter fraud controls are in place to prevent and deter fraud and minimise opportunity, and
action plans are in place to deliver an effective and proportionate response when suspected fraud occurs including the recovery of losses and lessons learnt.

Good practice suggests that to be most effective the risk assessment should be undertaken at a number of levels within the organisation:

Organisational – to assess the key policy, awareness raising and behavioural (including leadership commitment) requirements that need to be in place to build organisational resilience to counter fraud.
Operational – a detailed analysis of the fraud risk and counter fraud control framework at the operational level – by function (activity) or individual business unit (including programmes and projects).

Any fraud risk assessment should not be seen as a standalone exercise but rather an ongoing process that is refreshed on a regular basis. Carrying out the fraud risk assessment may reveal instances of actual or suspected fraud. Should this happen next steps will be determined on circumstances, the existing control framework (including any response plan(s)), and in consultation with the key members of the organisation’s management team.

Considering risks of fraud

There is evidence that during times of economic instability there is an increased risk of fraud. This may be because resource constraints can reduce internal controls and over sight and also because individuals facing hardship may be more likely to consider fraudulent practices.

The following provides further information on the three kinds of fraud that charities such as the School should consider.

a) Frauds of extraction

This is where funds or assets in possession of the School are misappropriated. Such frauds can involve own staff, intermediaries or partner organisations since they require assets that are already in the possession of the entity being extracted fraudulently. This could be by false invoices, overcharging or making unauthorised grant payments.

Essentially such frauds are carried out due to weaknesses in physical controls over assets and system weaknesses in the purchases, creditors and payments cycle. The cycle can be evaluated by considering questions such as who authorises incurring a liability and making a payment. On what evidence? Who records liabilities and payments? Who pays them and who checks them?

The close monitoring of management accounts, ledger entries and strict budgetary controls are also generally seen as an effective way of detecting and deterring frauds in this area.

Staff should be made aware of the increasing use of mandate fraud. This is where when the fraudster gets the organisation to change a direct debit, standing order or bank transfer mandate by purporting to be a supplier or organisation to which the School makes regular payments.

Insufficient due diligence around requests to amend supplier or payroll details has led to payments to unauthorised individuals so sufficient checks in these areas is of increasing importance. All employees should exercise real scepticism and not make any payments which are not properly supported and / or outside the normal payment mechanisms.

The Fraud Advisory Panel latest research shows the following as the fraud risks

on the horizon:

Staff fraud. As people feel the effects of the cost-of-living crisis on their finances.
Ransomware, particularly targeting network-attached storage. There has been a recent increase in these types of attack.
E-commerce / online shopping fraud. In the lead-up to Black Friday (25 November), Cyber Monday (28 November), and the busy Christmas shopping period.
Supply chain fraud. As some businesses and individuals find themselves in financial difficulty. To boost resilience, government is looking to create standard templates for supply chain contracts.

issue to charities recently and warning them against the risk of online fraud. Furthermore, the survey also pointed to a potential lack of awareness of the risks facing charities online and note that just over 24% have a formal policy in place to manage the risk and only around 55% of charities reported that cyber security was a fairly or very high priority in their organisation. The Commission’s discussion of this can be found here: https://www.gov.uk/government/news/charities-at-risk-of-underestimatingonline-fraud-as-one-in-eight-experienced-cybercrime-last-year

b) Backhanders and inducements

There is also an inherent risk that individuals who are able to authorise expenditure or influence the selection of suppliers can receive inducements to select one supplier over the other. This risk can be mitigated by robust supplier selection and tendering procedures.

There is also the risk that once a donation of money or aid has been authorised and released in the UK, this could be diverted, probably into the underground economy, as a result of inducements paid in the destination country. Charities should be aware of the requirements and extent of the UK Bribery Act 2010, as this extends their liability to actions beyond the shores of the UK and to cover the actions of their intermediaries and agents. Organisations are required to put in place proportionate measures to prevent backhanders and inducements from being paid, either by their workers, agents or intermediaries or to their workers, agents or intermediaries.

c) Frauds of diversion

This is where income or other assets due to the School are diverted before they are entered into the accounting records or control data. Essentially, it is easy to check what is there but very difficult to establish that it is all there. Therefore, ensuring the completeness of income provided to a School becomes difficult.

It is important to consider the different income streams and when and how they are received. So income received directly into the School’s bank account will be a lower risk than income being received by home based fundraisers.

A new survey has found that 12% of charities had experienced cybercrime in the previous 12 months, prompting the Charity Commission to highlighting this

Appendix 6 - External developments

We have summarised below some of the developments and changes in the charity sector over the recent period which we believe may be of interest and relevant to you. Please note that this information is provided as a summary only and that you should seek further advice if you believe that you have any specific related issues or intend to take or not take action based on any of the comments below.

We believe it is important to keep our clients up to date on the issues that affect them and, as a part of our ongoing communication, we regularly hold webinars and therefore encourage you to visit our website (https://www.crowe.com/uk/croweuk/industries/webinars).or register to our mailing list (nonprofits@crowe.co.uk) to stay updated on these. Any webinars which you have missed remain available on demand on our website.

Governance

The Charities Act 2022: Implementation

The Charities Act 2022 (the Act) received Royal Assent on 24 February 2022 and brings into force a number of key changes to the Charities Act 2011, aimed at simplifying a number of processes.

The Charity Commission are currently working through implementing the various changes brought about by the legislation, and have set out an indicative timetable here: https://www.gov.uk/guidance/charities-act-2022implementation-plan

Other provisions of the Act in force from 31 October 2022

Section 5: Orders under section 73 of the Charities Act 2011
Section 8: Power of the court and the Commission to make schemes
Section 32: Trustee of charitable trust: status as trust corporation
Section 36: Costs incurred in relation to Tribunal proceedings etc
Part of Section 37: Public notice as regards Commission orders etc.
Part of Section 40 and Schedule 2: Minor and consequential amendments

Provisions of the Act that came into force on 14 June 2023

Sections 9-14 and 35a: Permanent endowment
Sections 17, 19-22: Charity land
Sections 25-28: Charity names
Section 38 and 39: Connected persons
Part of Section 40 and Schedule 2: Minor and consequential amendments

Provisions of the Act expected to come into force on 7 March 2024

Section 1-3: Charity constitutions
Sections 18* and 23: Charity land
Section 24 and Schedule 1: Amendments of the Universities and College Estates Act 1925**
Section 29: Powers relating to appointments of trustees
Section 31: Remuneration etc of charity trustees etc
Sections 33, 34 and 35(b): Charity mergers
Section 37: For remaining purposes
Section 40 and Schedule 2: For remaining purposes
Section 18(1) (in part), (2)(a), (2)(c) and (3)(a) will come into force on 7 March 2024. Due to the provisions being linked to section 24 and Schedule 1, section 18(1) (for remaining purposes), (2)(b) and (3)(b) will come into force on 19 May 2025.

** Section 24 and Schedule 1 will come into force on 19 May 2025.

Provisions of the Act expected to come into force later in 2024

Sections 15 and 16: Ex gratia payments

The key provisions of the Act that have been implemented to date are set out below, and further information can be found here: https://www.gov.uk/guidance/charities-act-2022-guidance-for-charities

Making changes to governing documents

The Act introduces a new statutory power to allows trusts and unincorporated associations to make changes to their governing documents.

Charities will still however need to get the Commission’s authority to make certain ‘regulated alterations’ in the same way as companies and Charitable Incorporated Organisations (CIO).

Other related changes include:

how unincorporated charities must pass trustee and (where they have members) member resolutions when using the new power
that the Commission will apply the same legal test when deciding whether to give authority to charitable companies, CIOs, and unincorporated charities changing their charitable purposes
a power for the Commission to give public notice to, or to direct charities to give notice to, regulated alterations they make

The Commission have updated CC36 to reflect these changes, which can be found here: https://www.gov.uk/government/publications/changing-yourcharitys-governing-document-cc36

Selling, leasing or otherwise disposing of charity land

The following provisions are now in force:

provisions relating to disposals by liquidators, provisional liquidators, receivers, mortgagees or administrators
provisions relating to the taking out of mortgages by liquidators, provisional liquidators, receivers, mortgagees or administrators
changes about what must be included in statements and certificates for both disposals and mortgages

The Commission have updated CC28 to reflect these changes, which can be found here: https://www.gov.uk/government/publications/sales-leasestransfers-or-mortgages-what-trustees-need-to-know-about-disposing-ofcharity-land-cc28

Charity mergers

For certain mergers, new rules are now in force that will allow most gifts to charities that merge to take effect as gifts to the charity they have merged with.

Updated guidance on charity mergers can be found here: https://www.gov.uk/government/publications/making-mergers-work-helpingyou-succeed/how-to-merge-charities

Failed appeals

The Act introduces new rules granting the power for trustees to apply cy-près, allowing charities more flexibility in response to a charity appeal that has failed, allowing donations to be applied for another charitable purposes rather than having to be returned to donors under certain conditions:

i) The donation is a single gift of £120 or less; and the Trustees reasonably believe that during the financial year the total amount received from the donor for the specific charitable purpose is £120 or less (unless the donor states in writing that the gift must be returned if the charitable purposes fail); or
ii) The donor, after all agreed actions have been taken, cannot be identified or found; or

iii) The donor cannot be identified (for example cash collections)

The Charity Commission published guidance in relation to failed appeals on 31 October 2022, which can be found here: https://www.gov.uk/government/publications/charity-fundraising-appeals-forspecific-purposes

The Charity Commission has also updated its guidance CC20 ‘Charity fundraising: a guide to trustee duties’ to reflect these changes.

The Fundraising Regulator has also published guidance, further details of which are provided below.

Payments to Trustees for providing goods to the charity

The Charities Act 2011 provided a statutory power for charities, in certain circumstances, to pay trustees for providing a service to a charity beyond usual trustee duties.

The Act extends this power to allow, in certain circumstances for payments to trustees for providing goods to the charity.

Updated guidance can be found here: https://www.gov.uk/guidance/paymentsto-charity-trustees-what-the-rules-are

The Charity Commission has also updated its guidance CC29 ‘Conflicts of interest: a guide for charity trustees’ and CC11 ‘Trustee expenses and payments’ to reflect these changes.

Power to amend Royal Charters

Royal Charter charities are able to use a new statutory power to change sections in their Royal Charter which they cannot currently change, if that change is approved by the Privy Council.

Updated guidance can be found here: https://www.gov.uk/guidance/royalcharter-charities

Selling, leasing or otherwise disposing of charity land

Charities must comply with certain legal requirements before they dispose of charity land. Disposal can include selling, transferring or leasing charity land. The Act simplifies some of these legal requirements. The changes include:

widening the category of designated advisers who can provide charities with advice on certain disposals

confirming that a trustee, officer or employee can provide advice on a disposal if they meet the relevant requirements
giving trustees discretion to decide how to advertise a proposed disposal of charity land
removing the requirement for charities to get Commission authority to grant a residential lease to a charity employee for a short periodic or fixed term tenancy

Updated guidance can be found here: https://www.gov.uk/government/publications/sales-leases-transfers-ormortgages-what-trustees-need-to-know-about-disposing-of-charity-land-cc28.

Using permanent endowment

The Act introduces new statutory powers to enable:

charities to spend, in certain circumstances, from a ‘smaller value’ permanent endowment fund of £25,000 or less without Commission authority
certain charities to borrow up to 25% of the value of their permanent endowment fund without Commission authority

Charities that cannot use the statutory powers will require Charity Commission authority.

In addition, a new statutory power enables charities that have opted into a total return approach to investment to use permanent endowment to make social investments with a negative or uncertain financial return, provided any losses are offset by other gains.

Updated guidance can be found here: https://www.gov.uk/guidance/permanent-endowment-rules-for-charities

https://www.gov.uk/government/publications/total-return-investment-forpermanently-endowed-charities

Changes to Scottish charity law

The Scottish Parliament have laid legislation impacting the Charities (Regulation and Administration) (Scotland) Act 2023, taking effect from 1 April 2024.

The Act is intended to strengthen and update current law by increasing the powers available to the Office of the Scottish Charity Regulator (‘OSCR’) and provide consistency with certain elements of charity regulation in England, Wales and Ireland.

The key changes include:

OSCR will refuse an application to be registered as a charity from organisations that have no or a negligible connection to Scotland
a widening of OSCR’s inquiry powers, including:
power to direct charities to particular actions
power to appoint interim trustees
power to inquire former charities and former trustees
changes to OSCR’s powers to require charities and others to provide information
OSCR will have the power to remove charities from the Register that have failed to submit timely accounts and failed to engage with OSCR about putting this breach of trustee duties right

Additional changes expected on 1 October 2024, including the generation of a record of all individuals barred from acting as trustees.

Further details on the changes can be found on the OSCR website here: https://www.oscr.org.uk/news/what-do-the-changes-to-scottish-charity-lawmean-for-you/

Legislation for land and property in Scotland

The Register of persons with a controlled interest in land (RCI) is a new public register managed by the Registers of Scotland (ROS) and aims to improve transparency of land ownership in Scotland.

If a charity is an unincorporated association or trust and land or property is held on its behalf by the committee or trustees, the charity may be required to register its land or property on the RCI.

For guidance on whether registration on land held for Trusts or Unincorporated Associations is required follow OSCR guidance: https://kb.ros.gov.uk/rci/categories-of-ownership-or-tenancy

Investing Charity Money

CC14 has been updated, it is now called Investing Charity Money, and takes account of the High Court Judgement on the Butler Sloss case.

CC14 states that all charities should have a written investment policy if their governing document requires they have one or if the charity is a trust, and where it gives an investment manager powers to make decisions on its behalf. It includes:

Examples of various issues which may be relevant for trustees to consider when making investment decisions, such as the potential for an investment to conflict with the purposes of the charity, or the reputational impact of an investment decision.
Steps trustees ‘must’ take to be compliant with the law and those trustees ‘should’ do as best practice but not legally required.
Explanations on acting in the best interests of a charity, ensuring that above all else any decision furthers its purposes.
Guidance on social investment and no longer uses terminology that could get in the way of trustees’ understanding, such as ‘ethical investment’, ‘mixed motive investment’ and ‘programme related investment’. It should be noted that whilst the guidance has simplified the terminology, this distinction is still important from a financial reporting perspective, as the Charity SORP requires different accounting treatment for mixed motive and programme related investments.

It also provides example approaches to financial returns including avoiding those investments which can reduce support for a charity and harm its reputation, and is more specific on ESG factors:

aiming only for the best financial return you can achieve, within the level of risk that you have decided is acceptable for your charity
alongside the financial return you are aiming for, avoiding investments that conflict with your charity’s purposes.
alongside the financial return you are aiming for, avoiding investments that could reduce support for your charity or harm its reputation, particularly amongst its supporters or beneficiaries.
alongside the financial return you are aiming for, avoiding or making investments in companies because of their practice on environmental, social and governance (ESG) factors
alongside the financial return you are aiming for, using your shareholder vote, or other opportunities that come with your investment, to influence practice at companies that your charity is invested in.

The revised guidance can be found here: Investing charity money: guidance for trustees (CC14) - GOV.UK (www.gov.uk)

The Future Charity Chair

Crowe are pleased to have been involved in a research project looking at the essential attributes that charity Chairs of the future will need to embrace. This research explored the topic through roundtable discussions and in-depth interviews, with the final thought leadership report published in June 2024.

The research aimed to:

Contribute ideas that will help to shape the future development and recruitment of charity Chairs.
Enhance the future sustainability of the charity sector by highlighting longer term considerations for Board discussion.
Provide fresh thinking to positively influence regulation and best practice guidance for the sector.
Emphasise the value of good charity governance and the need for it to continually evolve to remain relevant.

The research highlighted a number of key findings, including challenges from a lack of diversity within charities (including trustees, staff and volunteers), and the need to recruit individuals who represent the charity’s beneficiaries.

Recommendations raised within the report include developing a leadership development programme for current Chairs, succession planning and a need to promote the role as one of ambition and aspiration.

The full report can be found here: The future charity chair | Bayes Business School (city.ac.uk)

Under the proposals, TPR sets out a “twin-track” model where trustees will be able to choose either a prescriptive “Fast Track” option or a more flexible “Bespoke” approach to completing and submitting an actuarial valuation for TPRs assessment. The proposed requirements for the fast track route include a number of areas such as suitable long-term objectives for schemes to achieve low dependency by the time a scheme is significantly mature (measured as 12year duration) and discount rates of gilts plus 0.5% p.a. The fast track does not explicitly take account of covenant strength. TPR plans to consult separately on proposed changes to covenant guidance.

The revised Code is expected to be published in the Summer.

Public trust in charities 2023

The Charity Commission has published the latest annual report into public trust in charities, the report shows that although public trust has risen the increase is small though the situation appears more stable than previous years.

There is still a divide in the perception of charities when it comes to size, with smaller charities faring better than larger organisations. The research includes interviews with members of the public from various demographics and reveals that half of the population are aware of the Charity Commission.

The full report can be found here Public trust in charities 2023 - GOV.UK (www.gov.uk)

Defined Benefit Funding Code of Practice

The Department for Work and Pensions published its revised DB Funding and Investment Strategy Regulations in January 2024 and will apply to actuarial valuations of defined benefit pension schemes from 22 September 2024. The Regulations are closely tied to the Pensions Regulator's new DB Funding Code of Practice.

The Pensions Regulator (TPR) is analysing responses to its second consultation on the new Defined Benefit (DB) funding code of practice. The new Code includes a requirement for a ‘funding and investment strategy’ (FIS) where trustees will be required to articulate their approach and decisions on funding and investments. Trustees must prepare a written statement of strategy which records the FIS and supplementary details, is signed on the trustees’ behalf by their chairperson, and submitted to TPR with each triennial valuation.

- https://www.thepensionsregulator.gov.uk/en/document library/consultations/draft-defined-benefit-funding-code-of-practice-andregulatory-approach-consultation

Charity Commission: Charity Use of Social Media

On 18 September 2023 the Charity Commission published guidance for charities on their use of social media, following a consultation carried out earlier in 2023.

A knowledge gap was identified through the Charity Commission’s casework where trustees were not always aware of the risks that may arise from the use of social media, meaning that some do not have sufficient oversight of their charity’s activity, leaving them and their charity vulnerable.

The aim of the guidance is to help trustees improve their understanding in this area, and to encourage charities to adopt a policy on social media as a way to set their charity’s approach. The guidance does not introduce new trustee duties but seeks to make clear how existing duties are relevant to a charity’s use of social media.

The guidance sets out that social media use can raise issues and risks for charities, relating to problematic content:

posted or shared by the charity on its own social media channels
posted by the public or third parties on a charity’s social media channel
• posted on a personal social media account that can be reasonably associated with the charity

The new guidance is clear that charities using social media should have a social media policy in place, explaining how it will help deliver the charity’s purpose, include guidelines for expected conduct and should ensure the policy is followed.

The guidance contains a checklist to help trustees and senior employees have informed conversations on what the right policy for them looks like.

https://www.gov.uk/government/publications/charities-and-socialmedia/charities-and-social-media

Charity Commission: Charities and Artificial Intelligence

On 2 April 2024 the Charity Commission published a blog explaining that charities may need to consider having an internal artificial intelligence (AI) policy, and that Trustees should be aware of the risks and opportunities arising from AI whether they are currently using AI or planning to do so.

The Commission is not anticipating issuing specific guidance but encourages trustees to apply existing guidance to new technologies as they emerge.

The key consideration is that AI should be used responsibly in a way that furthers the charity’s purposes. Before utilising AI, consider the advantages and risks – and how these will be managed – in the context of the trustee’s duties and charity’s objectives.

That could involve looking at what gaps can be filled, or insights generated by an AI tool, what skills are needed to use these tools to the charity’s advantage and if people within the charity’s trustees, staff or volunteers have those skills. This could also consider how staff or volunteers may already be using AI.

As the use of AI develops and more applications become available, the Commission recommends charities consider whether having an internal AI policy would be beneficial so it is clear how and when it can be used in governance, by employees in their work, or in delivering services to beneficiaries.

However, Trustees remain responsible for decision making and it is vital processes are not delegated to AI alone as there are risks inherent to the way AI is built, operates, and continues to learn. Trustees and others in charities must ensure that human oversight is in place to prevent material errors, and a human touch is key to the way many charities operate and interact with their beneficiaries.

Trustees should consider external risks and reputational damage arising from the misuse and recircularization of AI, such as fake news or deep fakes.

Whilst this evolving technology may seem daunting to many, there are more opportunities for charities to engage with the technology now it is more widely available.

The full blog can be obtained here:

https://charitycommission.blog.gov.uk/2024/04/02/charities-and-artificialintelligence/

Compliance

Holiday Entitlement – where are we now?

In March 2023 the government opened a consultation exercise to review the legislation governing holiday entitlement and holiday pay, which had over time become complex, and in some cases, difficult for employers to follow.

The consultation exercise ended on 7 July 2023, and the government’s response was published on 8 November 2023. The response indicates that the following actions will be taken:

Introduce an accrual method for calculating holiday

Entitlement will be calculated as 12.07% of hours worked in a pay period for irregular hours and part year workers. All other workers will accrue leave at 1/12th of their entitlement on the first day of each month during their first year of employment.

Sanction rolled-up holiday pay (RHP)

Legislation will be introduced to allow RHP for irregular hours workers and part-year workers only.

Introduce a definition of irregular hour workers & part-year workers
Legislation will be updated to define what is meant by irregular hours workers and part-year workers.

The Government has laid out revisions in respect of the above as part of The Employment Rights (Amendment, Revocation and Transitional Provision) Regulations 2023, effective from 1 January 2024.

Irregular hours and part-year workers

To the relief of many employers the revised Working Time Regulations (‘WTR’) will include provisions aimed squarely at addressing the flaws laid bare in the Harper Trust v Brazel case in which it was held part year workers on permanent contracts were entitled to a full year’s holiday entitlement, regardless of the number of weeks worked.

For holiday years from 1 April 2024 individuals who work irregular hours or partyear (such as term time or casual workers) will accrue holiday on the last day of each pay period at a rate of 12.07% of the number of hours worked during the pay period. This will ensure that their entitlement will remain in proportion to the hours that have been worked and differs from other employees who receive their full entitlement at the start of a holiday year. It is open to employers to allow the employee to take more holiday than they have accrued – in such cases its essential that employment contracts reserve the right for the employer to deduct over usage from final salaries.

For the same group of workers the revised WTR sees a welcome return of rolled-up holiday pay. Rolled-up holiday pay is where the accrual in a pay period is paid to the employee with their basic salary rather than when they actually take their holiday. The practice was outlawed because in the opinion of the European Court of Justice it discouraged workers from taking time off. However, for many casual work arrangements rolled up holiday pay is the only logical approach and many employers have continued to apply it.

From 1 April 2024 rolled up holiday pay will be permitted on condition that:

the individual is a part-year or irregular hours worker
the holiday pay is calculated using 12.07% of all pay for work done
the holiday pay (12.07%) is paid at the same time as the pay for work done
the holiday pay is separately itemised on the payslip.

It’s worth noting that the 12.07% formula does not account for the different holiday pots that we covered at the start of this article and therefore in some cases it could result in higher rates of holiday pay.

It is also the case that an employer has a legal duty to ensure that an individual takes their 5.6 weeks of holiday per year and this duty applies even when they are paid using rolled-up holiday pay and not when they actually take their holiday – which could make it difficult to monitor.

Record Keeping

Following a 2019 decision by the European Court of Justice employers have been required to record the daily hours worked by their employees.

Under the revised WTR employers will be required to keep records that evidence compliance with the 48-hour week, opt-out agreements, length of

night work and health assessments for night workers, and therefore an employer is not required to record daily hours if they can evidence compliance by other means.

Key Takeways

The revisions to the WTR should be welcome news for most employers, although in some areas they lack detail – such as a lack of definition around normal earnings for the calculation of holiday pay.

Employers of irregular and part year workers will be eager to adapt their processes to accommodate ‘accrue as you go’ and rolled up holiday pay.

For some employers it will be the much-needed spur to start and correctly calculate holiday pay and for others a need to evaluate the true status of their self-employed contractors.

However, for almost all employers there will be a need to look at policies and procedures to ensure that they align with the new rules on holiday carry over and ensure that ‘use it or lose it’ prompts are timetabled before the end of the holiday year.

The full article can be obtained here:

https://www.crowe.com/uk/insights/holiday-entitlements

Duty on employers to prevent sexual harassment at work

The Worker Protection (Amendment of Equality Act 2010) Act 2023 received Royal Assent on 26 October 2023, and came into force on 27 October 2023, and introduces a new duty on employers to take reasonable steps to prevent sexual harassment of their employees in the course of their employment. ‘In the course of their employment’ covers activities outside of the workplace, for example work social events.

This new duty to prevent sexual harassment will be enforceable by an employment tribunal, where it has first upheld a claim for sexual harassment. A tribunal will have the discretion to award a ‘compensation uplift’ by increasing any compensation it awards for sexual harassment by up to 25% where there has been a breach of the employer’s duty in sexual harassment cases.

The Equality and Human Rights Commission’s guidance on sexual harassment and harassment at work contains steps employers should consider taking in order to prevent and deal with harassment at work. These steps include having

an effective and well communicated anti-harassment policy in place and maintaining a reporting register of complaints for all forms of harassment.

A copy of the guidance can be found here:

https://www.equalityhumanrights.com/sites/default/files/sexual_harassment_a nd_harassment_at_work.pdf

Charities and terrorism

The Charity Commission guidance on ‘Charities and Terrorism’, first published in December 2012, has been updated in November 2022.

The guidance forms Chapter 1 of the Charity Commissions compliance toolkit, which provides advice and information on key aspects of the UK’s counterterrorism legislation, highlights how particular provisions are likely to affect charities and their work, explains the various ‘terrorism lists’ that exist and advises trustees what to do if they discover their charity may be working with or connected to people or organisations on terrorism lists.

The updated toolkit signposts to new guidance from the Crown Prosecution Service on proscription offences and terrorist financing offences and cases involving humanitarian, development and peacebuilding work overseas.

The updated toolkit can be found here:

https://www.gov.uk/government/publications/charities-and-terrorism

Fundraising Regulator: Annual complaints report

In November 2023 the Fundraising Regulator has published its latest Annual Complaints Report which covers the period 1 April 2022 to 31 March 2023. The report analyses complaints received by the Fundraising Regulator and complaints reported to 58 of the UK’s largest fundraising charities.

The number of complaints to the sample charities rose proportionally for most methods in line with increased fundraising activity – with 13 of the 23 fundraising methods having increased complaint numbers in 2021/22 compared to 2020/21. The overall number of complaints had increased since 2021/22 which is reflective of increases in fundraising activity since the pandemic.

Over the same period, complaints about fundraising methods including door to door fundraising (60), charity bags (57) and addressed mail (51) accounted for the majority of the 270 complaints within the Fundraising Regulator's scope. A common theme was that of misleading information, highlighting the importance

of clarity in fundraising materials.

You can see the full report here.

Charities and campaigning

With the UK due to hold a general election by January 2025 at the latest, there presents an opportunity for charities to raise awareness and shape policy decisions.

The majority of charity campaigning does not fall under election law rules, however, care must be taken when campaigning that the charity does not stray into election campaigning and remains independent from party politics.

Various guidance is available from the Charity Commission to charities to assist in assessing the risks to the charity:

Campaigning and political activity guidance for charities (CC9)
Charities, Elections and Referendums guidance
Charities and political donations guidance

The guidance emphasises the need for any campaigning to be carefully considered by the Trustees, particularly in respect to the risks, costs and benefits of any such activity.

Charities will be required to register with the Electoral Commission as non-party campaigners if they spend more than £10,000 on regulated campaign activities and may be required to provide financial returns after the election.

The Electoral Commission has produced guidance to support organisations which can be found here.

The Charity Commission have urged charities to ensure that they have read and understood the Code of Practice for non-party campaigners which has also been produced and can be found here.

Gender pay reporting

Any employer with 250 or more employees on a specific date each year (the ‘snapshot date’) must report their gender pay gap data. For most entities the snapshot date is the 5 April of each year.

You must report and publish your gender pay gap information within a year of your snapshot date. You must do this for every year that you have 250 or more

employees on your snapshot date.

Guidance on what and how to report can be found here:

https://www.gov.uk/government/publications/gender-pay-gap-reportingguidance-for-employers

Failure to prevent fraud and other economic crimes

A new failure to prevent fraud offence has been introduced by the Economic Crime and Transparency Act 2023. It will apply to all large corporate entities, including charitable companies and CIOs.

An offence is committed where an employee or agent commits fraud. The penalty is an unlimited fine for the organisation, and no personal liability will be introduced for trustees or management failure to prevent fraud.

The legislation is far reaching, and where an organisation operates or is based overseas, if an employee commits fraud under UK law or affecting UK victims, the company can be prosecuted.

There is a defence to the failure to prevent economic crimes if the organisation can prove that it had reasonable prevention measures in place, or that it was not reasonable in all the circumstances to expect it to have had any procedures in place.

The offence will come into force when the government publishes statutory guidance on the reasonable procedures organisations should consider putting in place.

Full details of the legislation can be found here.

The Economic Crime and Corporate Transparency Act 2023

In October 2023, the Economic Crime and Corporate Transparency Act (the Act) received Royal assent and began coming into effect in stages. Secondary legislation will be needed before some of the key changes can be implemented.

The Act aims to improve the accuracy and quality of data filed with the Registrar of Companies, helping to tackle economic crime and boost confidence in the UK economy.

From a company secretarial point of view, the most significant change introduced by the Act is the reform of Companies House.

Key changes

Registered office address to be ‘appropriate’

All companies must now have an ‘appropriate address’ as their registered office. This means that documents sent to the registered office address will reach someone acting on behalf of the company and that delivery can be acknowledged. Companies are not allowed to use a PO Box address. In the event of non-compliance, Companies House will change the registered office address to a default address.

Registered email address

Both existing and new companies must provide Companies House with a registered email address for communication purposes. This information must be included when filing the next confirmation statement with a statement date of 5 March 2024 onwards or at the time of incorporation. A new company cannot be incorporated without this information, and existing companies will not be able to file a confirmation statement without it.

Statement of lawful purpose

After 4 March 2024, new companies must confirm that they are being incorporated for a lawful purpose. Existing companies will need to confirm annually in the confirmation statement that their intended future activities will be lawful.

Broadening of Registrar’s powers

The Registrar will have enhanced powers to question information filed at Companies House and request additional information to ensure that documents are timely, accurate, and not misleading. Companies House will have greater authority to scrutinise, query, and reject information that is filed or is in the process of being filed.

Authorised Corporate Service Provider (ACSP)

Under new identity verification measures, most documents filed at Companies House must be delivered by an ACSP. This includes incorporations, officer appointments (directors, secretary, members of LLP, partner of LP) and PSC appointment. This means if you are filing these documents with Companies House then you will need professional corporate service providers to do this for you or you will have to follow the additional identity verification steps to be introduced by Companies House.

Changes to be introduced to Company Accounts

Companies House is currently working on mandating digital filing and full tagging of financial information in an iXBRL format. The number of times a company can shorten its Accounting Reference Period will be reduced. Small companies will be required to file a profit and loss account and a directors’ report, while micro-entities will need to file a profit and loss account. The option to file abridged accounts will be removed, and companies claiming an audit exemption will need to provide an additional eligibility statement.

Restrictions on the use of corporate directors

All directors (or director equivalents) of the entity that have been appointed as a corporate director must be natural persons, and those natural person directors must have undergone an appropriate identity verification process. Historically, any corporate entity could be appointed as a corporate director of a UK company. However, moving forward, only UK-registered entities will be eligible for appointment as corporate directors, and all directors (or director equivalents) of such entities must be natural persons. Companies with existing corporate directors will be given 12 months to comply; within that time, they must either ensure their corporate director is compliant with the principles or resign them.

Considering the recent changes introduced by the Act, boards of directors will need to review their current processes for filing at Companies House, adopt new systems for verifying filings, monitor identity verification requirements, introduce new policies on director changes, and review the appropriateness of the company's registered office address.

New free digital service from National Cyber Security Centre

The National Cyber Security Centre have launched a new free digital service, MyNCSC, which aims to enhance charities’ cyber security approach.

MyNCSC combines Active Cyber Deference (ACD) digital services, offering a unified experience tailored to each user’s needs, including content, vulnerabilities, and alerts.

The MyNCSC platform is a free service for UK registered charities, enabling organisations to access various ACD services, such as:

early warning
mail check, assessing email security compliance
web check, finding and fixing common security vulnerabilities in the charity’s website

There are plans to gradually increase the number of ACD services integrated with MyNCSC.

MyNCSC offers a unified user interface for accessing multiple services promoting collaboration within organisations when managing digital assets and viewing findings.

For further information and guidance on how MyNCSC works, visit:

https://www.ncsc.gov.uk/information/myncsc

Virgin Media pension case

Until it was abolished in April 2016, defined benefit pension schemes could contract out of the State schemes. In return for lower employer and employee National Insurance contributions, a scheme was required to meet certain minimum requirements in relation to the benefits provided through the scheme. Before 6 April 1997 a contracted-out salary-related scheme was required to provide each member with a Guaranteed Minimum Pension. The 1995 Pensions Act ended that regime and with effect from 6 April 1997 contractedout schemes had to satisfy the Reference Scheme Test, which had to be assessed and certified by the scheme actuary that the minimum level of benefits under the reference scheme test would continue to be satisfied after the amendment was made.

On 25 July 2024, the Court of Appeal upheld the High Court’s decision in relation to Virgin Media v NTL Pension Trustees II Limited that the statutory actuarial confirmation was required, and without this, alterations are void. This decision could potentially have a significant impact for other schemes where changes have been made without actuarial confirmation.

The question appealed was whether a confirmation was required for changes to future service benefits or just past service benefits. The Court of Appeal upheld the High Court's decision that confirmation was required for amendments to future accruals, before legislation changes in 2013. Legislation does allow the Government to make retrospective regulations to validate amendments that are void due to the absence of such written confirmation.

Therefore, depending upon the outcome of any subsequent appeal to the Supreme Court, the industry may call on the Government to take action. On 25 July 2024, the Court of Appeal upheld the High Court’s decision that the statutory actuarial confirmation was required, and without this, alterations are void. The question appealed was whether a confirmation was required for changes to future service benefits or just past service benefits. The Court of Appeal upheld the High Court's decision that confirmation was required for amendments to future accruals, before legislation changes in 2013. Legislation does allow the Government to make retrospective regulations to validate amendments that are void due to the absence of such written confirmation. Therefore, depending upon the outcome of any subsequent appeal to the Supreme Court, there is the possibility that DWP may take action to validate scheme rule amendments which would otherwise be invalidated by the principle in the Virgin Media case.

Employers will also need to consider the impact of the case on their accounts, and this will include retrospective and future liabilities and therefore will be a larger amount. If the amount is not included in actuarial valuations due to lack of information, there will need to be an assessment as to whether a disclosure is required.

On 29 July 2024 a joint statement was issued a working group formed by the Association of Consulting Actuaries, the Association of Pension Lawyers and the Society of Pension Professionals proposing that the Secretary of State for Work and Pensions make regulations to validate retrospectively any scheme rule amendment affecting reference scheme test benefits, that is held to be invalid solely because a written actuarial confirmation was not received before that amendment was made. If such regulations were to be made, this would provide a fallback position for DB schemes and their sponsoring employers if issues of invalidity of scheme rule amendments were to be raised based on the Virgin Media case. Other industry bodies have also begun lobbying government to make these changes.

In the meantime, scheme actuaries may need to consider whether they need to take account of matters raised through the Virgin Media case and take into account the impact on funding updates and triennial actuarial valuations. To date actuaries have not been explicitly referred to this matter in their actuarial valuations.

From a pension scheme accounting perspective, unless the possibility of settling the contingent liability is remote or it is not material disclosure should be made in the notes to the financial statements of the estimated financial effect and an indication of the uncertainties relating to the amount or timing. Trustees of pension schemes should assess whether disclosure is required in their accounts.

Financial and other reporting

FRC Amendments to FRS 102

The Financial Reporting Council (FRC) issued amendments to financial reporting standards on 27 March 2024, the changes are mostly effective for accounting periods beginning or after 1 January 2026. This follows the consultation impact assessment during 2023.

The amendments include:

a new model of revenue recognition in FRS 102 and FRS 105 based on the IFRS 15 five-step model for revenue recognition with appropriate simplifications
• a new model of lease accounting in FRS 102 based on IFRS 16 onbalance sheet model (again with appropriate simplifications)
various other incremental improvements and clarifications

The FRC intends to publish new editions of the standards and updated staff factsheets with guidance during 2024.

The SORP committee are reflecting on these amendments and exploring how they will impact the remaining stages of the SORP development process with updates to follow.

The full amendment documents can be obtained here:

https://www.frc.org.uk/news-and-events/news/2024/03/frc-revises-uk-andireland-accounting-standards/

They should not undertake commercial activities.
Charities should be run and staffed [for free] by volunteers.
Too much is spent on overheads.
Charities don’t pay taxes, so need less money.
Professional qualifications are needed to become a charity trustee.
Charities are less vulnerable to fraud than other organisations.
Charities should not engage in campaigning and political activity.

The guidance includes access to a webinar discussing some of the key myths with voices from the sector.

The Guidance can be found here: Dispelling common myths about charities | ICAEW

Charity Digital Skills report

The Charity Digital Skills annual report has been running since 2017 and tracks the sector during a time of significant change due to the impact of the pandemic. As we continue to navigate the cost of living crisis and the impact on the sector, this report aims to shed some light on how the digital capabilities of charities have evolved and highlighting key trends.

The report highlights that:

Three quarters (78%) of charities say that digital is more of a priority for their organisations
1 in 5 charities say their IT provision is poor

Dispelling common myths about charities

ICAEW, with input from Crowe, has published guidance exploring ten myths surrounding charities and their operations, with a view to encourage transparent communication in areas where these misconceptions are prevalent. The ten myths considered are:

Charities spend too much on fundraising.
They should not make a surplus or build up cash reserves.
8 out of 10 (79%) of charities see improving their website, digital presence or social media as the greatest priority for the next year
Improving data security, privacy and GDPR compliance has become more of a priority since 2022.
Almost half (46%) of charities say they do not have anyone with digital expertise on their board

The gaps seen in previous years persist, these include funding and leadership. With the rapid growth in AI development charities must ensure that digital skills remain a priority to avoid being left behind.

Too much is spent on highly paid executives.

Digital Skills Report for the Charity Sector - Introduction (charitydigitalskills.co.uk)

NCSC publishes “Cyber Threat Report: UK Charity Sector”

The National Cyber Security Centre has published a report outlining the cyber threats currently facing charities of all sizes.

The 2023 DCMS Cyber Security Breaches Survey, which measures the policies and processes organisations have for cyber security, as well as the impact of breaches and attacks, highlighted 24% of UK charities had identified a cyberattack in the last 12 months, a decrease from 30% in 2022. The drop is driven by smaller organisations – the results for medium and large businesses, and high-income charities, remain at similar levels to last year.

The report notes that the charity sector is particularly vulnerable as they can hold significant amounts of sensitive or valuable data, making them attractive targets, alongside a perception that charities have fewer resources to commit to cyber security.

The report provides details of the commonly perpetrated cyber-attacks, as well as a number of recommendations and links to guidance to assist charities strengthen their defences.

A copy of the report can be obtained here:

https://www.gov.uk/government/statistics/cyber-security-breaches-survey2023/cyber-security-breaches-survey-2023#summary

Charity Commission: Guidance on accepting donations

In March 2024, the Charity Commission published new guidance to help charities when deciding whether to accept, refuse or return a donation.

The guidance explains when donations must be refused or returned and when these might likely need to be refused or returned. The guidance makes clear that trustees should start from a position of accepting donations, but from time to time a charity may face a difficult decision as whether to refuse or return a donation. The guidance sets out an approach for trustees to take on these occasions, advising they:

consider the risks involved in refusing or returning the donation, and how likely and serious these are. These include negative financial impact, ability to deliver services and ability to attract donations in future
• consider the risks involved in accepting or keeping the donation, and how likely and serious these are. These include the likelihood of reduced support or reputational harm, particularly among supporters or beneficiaries
determine how any decision aligns with their charity’s purposes
determine what steps they can take to mitigate the risks. These include negotiating the terms of a conditional donation with the donor or developing a public explanation for a decision

It explains that if a charity is considering refusing or returning a donation, the charity must have the legal power to refuse or return a donation. In some situations, there are additional legal rules to consider e.g. disposal or land or properties of a special trust.

The charity should also consider whether it needs to make a SIR when it refuses or returns a donation.

Ultimately, as the guidance states: “Deciding whether to accept, refuse or return a donation is likely to involve a careful balancing exercise. There may be no right or wrong answer, but your decision must be rational and reasonable, and supported by clear evidence.”

The full guidance can be obtained here:

https://www.gov.uk/guidance/accepting-refusing-and-returning-donations-toyour-charity

Taxation

VAT and charity fundraisers: dual purpose?

UK VAT law allows one-off fundraising events to benefit from applying the VAT exemption to the income generated. It could also zero-rate programmes, children’s clothing, and the sale of donated goods.

The Tribunal decision involving the Yorkshire Agricultural Society (YAS) focused on the conditions imposed when applying the fundraising exemption. VAT law states that a charged event cannot qualify for VAT exemption unless its primary purpose is fundraising. HMRC had taken a rigid approach to

interpreting this rule, insisting that there can be no other motive behind the

event to qualify for the exemption.

This approach has restricted the application of the fundraising exemption from organisations that they consider ‘run such events anyway’ (and so do not meet this fundraising primary purpose test).

The YAS decision was heavily influenced and referred frequently to the Loughborough decision, which HMRC won. However, in YAS the Tribunal did not read Loughborough as determining that fundraising must be the sole or overriding purpose of an event. This appears to have undermined HMRC’s arguments significantly.

YAS run an annual show which has a dual educational and fundraising purpose. HMRC argued that the event income could not be VAT exempt as the primary intention was not fundraising. The Tribunal determined that there can be more than one primary purpose in this instance, without undermining the conditions of the exemption.

The Tribunal also agreed with the Upper Tier Tribunal case involving Loughborough Students’ Union (and others)in another important point around the fundraising event rules. It agreed that the requirement to clearly hold out (advertise) an event as a fundraiser as an exemption condition, was ultra vires of EU VAT Law.

HMRC sought to argue that its assessment was all made within the relevant time limits but lost on these points also. HMRC are out of time if both of the following time limits are exceeded:

the VAT period is more than two years old
HMRC had the full facts for more than one year.

HMRC argued that they hadn’t been given the full facts until the most recent adviser’s letter,

but from the evidence, it was clear this merely re-confirmed the full facts already

provided.

Whilst this case does not set a legal precedent as a First-Tier decision, it does rely very heavily on the Upper Tribunal decision in Loughborough, which set a legal precedent. It appears to have pushed back the boundaries of HMRCs restrictive approach to charity events qualifying for the fundraising VAT exemption. HMRC must abide by time limits when assessing taxpayers.

New rates for creative industry tax reliefs

New permanent rates announced in the Spring Budget 2024 will apply from 1 April 2025 for Theatre Tax Relief, Orchestra Tax Relief and Museums and Galleries Exhibition Tax Relief.

The new rates will be 40% for non-touring productions and 45% for touring productions and all orchestra productions. Previously, the rates were due to taper back to their original levels of 25% and 20% by 2026.

Additionally, Museums and Galleries Tax Relief – which was previously due to expire in 2026 – will have its sunset clause removed so that it is now a permanent relief.

Administrative changes to creative industry tax reliefs

All claims for Theatre Tax Relief, Orchestra Tax Relief and Museums and Galleries Exhibition Tax Relief made on or after 1 April 2024 must be accompanied by an online information form. The form must be submitted before or on the same day as the submission of the company tax return in which the claim is made. The form is available here:

https://www.gov.uk/guidance/support-yourclaim-for-creative-industry-taxreliefs

A number of other administrative changes have been made to the creative industry reliefs which include a requirement to disclose connected party transactions with a potential restriction on connected party costs where these have not taken place on an arm’s length basis.

Further details of the administrative changes are available in this policy paper:

https://www.gov.uk/government/publications/creative-industry-tax-reliefsadministrativechanges/administrative-changes-to-thecreative-industry-taxreliefs

Gift Aid of waived loans and refunds

In February 2024, HMRC published new detailed guidance explaining when they will consider donations made by waiver of a right to a refund or loan repayment to be eligible for Gift Aid. The new guidance replaces previous detailed guidance, which had been largely withdrawn in early 2023.

The new guidance explains HMRC’s evidence requirements which depend on the type of arrangement. For a waiver of a refund, a record of correspondence will generally be sufficient. For a loan waiver, HMRC will expect to see a legally enforceable document in place.

Importantly, the new guidance states that where a loan waiver is made by a company to a charity, HMRC take the view that for corporation tax purposes, this transaction is governed by the loan relationship rules rather than the rules for charitable donations. Under the loan relationship rules, debt releases made between connected companies are not usually deductible for tax purposes. Charity subsidiaries that donate their taxable profits annually to their parent charities should take note of this in particular.

HMRC’s updated guidance is available here:

https://www.gov.uk/government/publications/charities-detailed-guidancenotes/chapter-3-gift-aid#chapter-345-claiming-gift-aid-onwaived-refunds-andloan-repayments

VAT: Changes to penalty regime

For VAT accounting periods starting on or after 1 January 2023 there are new penalties for VAT returns that are submitted late and VAT which is paid late, in addition the way interest is charged has also changed. The changes are aimed at simplifying and separating penalties and interest.

The system has changed to a penalty points system, where for each return submitted late, a penalty point is issued. The penalty point threshold is determined by the accounting period, with a higher threshold for more frequent submissions. When the threshold is reached, a penalty of £200 will be issued, with a further £200 penalty for each further late submission.

Penalty points will have a lifetime of two years, after which they will expire. The period is calculated from the month after the month in which the failure occurred, e.g. submission due January 2024, so the penalty point will expire in February 2026.

Once a taxpayer reaches the threshold, all points accrued will be reset to zero when the following conditions are met:

a period of compliance
• the taxpayer has submitted all submissions in the previous two years (even if late).

The new late payment penalty will apply in instances where the return is submitted on time but the payment is not.This penalty considers the length of the delay in making payment and the penalty increases over time.

As part of the new penalty regime, HMRC has also updated its Late Payment Interest (LPI) rules to bring these in line with other tax regimes.

Full details of the updated regime can be found here:

https://www.gov.uk/guidance/penalty-points-and-penalties-if-you-submit-yourvat-return-late

Employment Tax: what’s keeping us hot this summer?

In the recent Budget and fiscal events, the net impact on changes to employment taxes have been relatively low-key.

However, we are seeing three key areas which employers are seeking our assistance with:

compliance and de-risking
cost reduction
driving efficiencies.

- Compliance and de risking

Recently, we have seen HMRC increase their programme of performing checks of employer records. This is unsurprising as a Public Accounts Committee report informs that HMRC recovers £18 in income tax/ National Insurance Contributions (NICs) for every £1 spent on compliance activities. This contrasts with the reported £4 return for every £1 spent on the task force recovering Coronavirus Job Retention Scheme (CJRS) claim error or fraud.

The total tax gap (being the difference between the tax HMRC expects to collect and that actually paid) in 2020/21 was £32 billion, and Income Tax/NICs made up £12.7 billion (39%) of the gap. Therefore, it’s not surprising HMRC target employers for potential income tax and NICs irregularities.

To mitigate the risk of undergoing an invasive HMRC check, employers can initiate a self-review and voluntarily disclose any income tax/ NIC irregularities to HMRC. Voluntary disclosure may be beneficial as it can be viewed as good behaviour by HMRC. Additionally, this can also help protect the employer’s reputation as a “good citizen”, and support ESG considerations.

Cost reduction

The cost-of-living crisis remains a concern for all, including the social purpose and non profit sector.

An effective salary sacrifice arrangement can help both employees and employers, and potentially ease some of the economic pressures. This is a way to provide attractive, ethical, and environmentally responsible benefits to employees at a time when the need to attract and retain key talent is a high priority for employers.

Salary sacrifice is, in simple terms, an arrangement whereby an employee gives up some of their gross pay in return for a non-cash employer provided benefit. Typically, we see salary workplace pension contributions paid via salary sacrifice.

An effective salary sacrifice means that although the employee’s gross pay is lower, their take-home pay increases through NIC savings and tax savings on some benefits. Employers will also save on NICs.

Driving efficiencies

During the pandemic, there was talk about what the ‘new’ normal would look like.

Employers should now take stock of their employment tax processes and procedures, to check that their current ways of working are effective and efficient. Some areas of focus should include:

identify areas of robustness and conversely, where improvements could be made
maximise available tax exemptions
restructure and streamline current processes
tighten controls to reduce errors or fraud
underpin with sound governance.

VAT rates on new buildings, energy supplies and disabled building

works

0%, 5%, or 20%? Navigating the VAT rate for the various activities that your organisation is involved in can be challenging.

- Can I get zero rating on a new charity building?

There is often a common misconception that a new building purchased or built by a charity should automatically be zero-rated.

A recent VAT Tribunal case (Paradise Wildlife Park) has reconfirmed the position that for the building to be zero-rated, the building must be used by the charity in one of the following ways:

otherwise than in the course and further of business
• as a village hall or similarly in providing social or recreational facilities for the local community.

It is important that charities are aware of whether their activities are deemed to be business under the interpretation of VAT law. Only last year, HMRC issued new guidance on what they consider to be in the course and furtherance of business. The tests are easy to meet where the activities undertaken by the charity in the building, are done for free or totally funded by grants and donations.

However, as seen in the Paradise Wildlife Park decision, it is important to note that not charging VAT does not automatically mean that you are not in business.

There is a small 5% threshold for business use in a charitable building but in our experience, many charities acquire or construct a new building which will be used for business purposes exceeding this level and will therefore not qualify for zero-rating.

If the building does qualify for zero-rating, the charity is required to issue a certificate to the supplier of the property who is either selling the building to the charity or constructing it for the charity.

Can I get the reduced rate of 5% on gas and electricity?

A charity can only get the reduced rate of 5% on gas and electricity when it applies to a building that is used by a charity for a ‘qualifying use’.

This means that the reduced rate of 5% is not automatically applied by virtue of charity status.

Although there are various de minimis limits and tests, for the most part the 5% qualifying use applies to gas and electricity used for:

buildings used by a charity for a relevant charitable purpose (a nonbusiness use)
relevant Residential Properties
domestic Properties.

If you have a building that does qualify for the reduced rate and the supplier has been incorrectly charging you VAT at 20%, you can get the VAT incorrectly charged to you amended to the correct 5% for the preceding four years.

Please note there may be buildings owned by a charity which have 'mixed use' of qualifying and non-qualifying areas. These buildings can have the charges apportioned with the 5% VAT levied on the qualifying areas, based upon any fair and reasonable method of calculation. The remaining part will be charged at the full standard rate of 20%.

If more than 60% qualifies at the reduced rate, the entire building can be invoiced at 5% although the charity has a responsibility to review this situation on a regular basis to ensure the apportionments remain consistent and reflective of how the building is being used.

VAT reliefs on building works and disability

This is not an exhaustive list and takes only part of the VAT law, but all charities are entitled to zero rating on ANY of their buildings in relation to the following building works:

Services to facilitate a disabled persons entry to or movement within any building.

The supply to a charity for the service of providing, extending, or adapting a washroom or lavatory to use by disabled persons in a building, or any part of a building, used principally by a charity for charitable purposes.

If you have been incorrectly charged 20% VAT by your supplier for building works that should have been zero-rated, you can go back four years and have the VAT incorrectly charged to you refunded.

Charities are not always able to recover VAT in full on costs, therefore it is important to take advantage of VAT rates below the standard 20%. In all the above scenarios it should be noted that the charity is required to issue a certificate to the supplier in order to get the zero or reduced-rate of VAT.

HMRC guidance states that a certificate incorrectly issued could lead to a penalty of up to 100% of the VAT which has not been charged to them. Charities should check their status before claiming the reduced or zero-rates and issuing a certificate to their supplier. If you have been overcharged there is still an opportunity to reclaim the VAT from the supplier.

A non-business activity leading to a taxable supply

The First-tier Tribunal judgement of The Towards Zero Foundation (TZF) case, provided many charities with an opportunity to consider whether they have a claim to make for input tax.

The judgement confirmed that where a charity can prove that a non-business activity has a direct and immediate link to a subsequent taxable business supply, some if not all of the VAT incurred on the non-business activity becomes recoverable.

VAT incurred in relation to a non-business activity is normally fully nondeductible, however, VAT incurred in relation to a taxable supply is fully recoverable.

The VAT Tribunal heard that TZF tested car’s safety features as a secret buyer, to highlight any issues that car companies need to change. The foundation’s aim is to have no road deaths caused by a lack of safety features in cars.

TZF levied no charge for the secret buyer trial testing making this a nonbusiness activity. Where cars failed the safety standards manufacturers were notified of the areas of concern, and re-testing was then ordered by manufacturers to show where improvements had been made. The manufacturers commissioned TZF to issue a retesting report, this was a business supply for which TZF charged the manufacturer a fee plus VAT.

HMRC argued that as the first part was non-business TZF could not have the input tax incurred on the initial testing back. The Court accepted that there was a business intention throughout the process, despite non-business activity at the outset.

Independent schools – draft legislation to apply VAT on fees

In July 2024, draft legislation and accompanying papers was released by the Treasury on the introduction of VAT on independent school fees. It is important to note that this is subject to consultation and consequently may change. The main points are listed below.

1. When will VAT will be introduced on private school fees?

The new law would be effective from 1 January 2025.

Schools that are not VAT registered would need to register for VAT on or before that date. Schools that are not VAT registered but have VAT registered trading subsidiaries, need to consider whether to register as a VAT Group or have separate VAT registrations.

2. How will the anti avoidance/anti forestalling legislation apply?

Any school fees paid in advance which were received on or after 29 July 2024, would not qualify for the education exemption.

3. Where would VAT be applied?

VAT would be applied to education, boarding and accommodation, as well as any extracurricular lessons such as music, drama or sports tuition. However, we have noted that the sport exemption in the VAT Act 1994 Group 10, may still apply to letting of sport facilities to individuals.

4. What would not be subject to VAT?

Supplies deemed to be ‘closely related’ to education such as the supply of transport, catering, books and stationery would continue to be exempt from VAT.

The documents do mention that ‘value shifting’ on these individual supplies would be challenged if they do not believe the supplies are made at a market value.

The government would seek to ensure that pupils with the most acute SEN are not impacted by these changes. It appears that there would be two exceptions:

5. Will nursery school fees up to reception be subject to VAT?

The supply of nursery school education would remain exempt, however once fees are charged for children of compulsory school age (referred to as the reception class in the UK), VAT will applied.

6. What about before and after school childcare?

This would remain exempt as a supply of welfare where the supply qualifies as childcare and does not form part of further education (see 3 above).

7. What about fees paid in advance (FiA) where payment has been made before 29 July?

There is a specific mention of FiA received before 29 July 2024 which states that HMRC would seek to challenge schemes, where payments do not relate ‘to specific terms’ fees that have already been set’.

We do not yet have HMRC's formal policy on this statement and there will be further updates in the coming weeks. In the meantime, schools should continue to inform parents who have paid FiA that VAT would need to be added if HMRC's challenge on this basis was successful.

8. What about schools who have pupils with Special Education Needs (SEN)?

(i) the pupil's condition is covered by an Education, Health and Care Plan; and

(ii) the state system cannot accommodate pupils' needs.

9. What will happen now?

The consultation period will now be open until 15 September 2024, comments and questions can be submitted to the Treasury. We anticipate that there will be a number of representations made during this sevenweek period by professional bodies, professional associations and schools alike.

However, schools must now prepare for VAT to be introduced from 1 January 2025. As well as registering for VAT by this date, schools should be preparing their software systems to account for VAT on income and expenditure and ensure that VAT returns can be filed in line with Making Tax Digital legislation.

The HMRC briefing is available here - https://www.gov.uk/government/publications/revenue-and-customs-brief-82024-removal-of-vat-exemption-for-private-school-fees-and-boarding-fees.

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