Related Party Transactions

A related party transaction (RPT) is a transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged. A related party include persons and entities with control or significant influence over the academy trust, and members of the same group of companies.

RPT policy changes have been announced and will be effective from 1^st September 2023. The changes include:

Removing the approval requirements for RPTs with a college, university or a school which is a sponsor of the academy trust. These transactions should still be disclosed within the financial statements
Increasing the approval threshold from £20,000 to £40,000 for other RPTs
Removing the cumulative element (i.e the £40,000 approval threshold only applies to single transactions with the same supplier, the value is not aggregated)
Confirming the advance reporting of contracts/ other agreements with related parties also includes those which are being renewed

Why RPT Policy changes have been made:

RPTs were a common theme in recent discussions with the sector to improve financial oversight
The approval requirements for transactions which involved other schools, colleges and universities were burdensome
The £20,000 approval threshold was not deemed to be proportionate

The Academy Trust Handbook (ATH) requires that RPTs be declared in advance of the contract starting and submitted through the online form. Transactions starting before the end of August 2023 can be submitted until 31 August 2024 and ATH 2022 requirements will apply. ATH 2023 requirements will apply to transactions starting on or after 1 September 2023.

Register for our upcoming webinar: Accounts Direction and Academy Trust Handbook 2023

Presented by

Darren O'Connor

Partner

Rebecca Foy

Senior Manager

We are delighted to invite you to our upcoming Webinar - Accounts Direction for 2023 and the Academy Trust Handbook, during which we will provide insight into the trends in the sector and issues faced by Academies and Multi-Academy Trusts.

Our webinar will provide some insight into the accounting and financial issues that may arise as a result of the release of the new guidance. There should be something in here for everyone, whether you are a Governor, Head Teacher or School Business Manager.

During the webinar our experts, will discuss:

Key changes in the Academy Trust Handbook 2023
The Academies Accounts Direction 2022 to 2023
Key issues in preparing the annual accounts
Other financial matters

Date: Wednesday 20^th September 2023

Time: 11:00am – 11:30am

Cost: Free

Venue: Zoom

Electric Vehicle Charging and VAT

If the school has its own EV charger and allows staff to use it for a fee, the following VAT treatment applies.

School is not VAT registered, makes VAT 126 claims

The recharge to employees counts towards the VAT registration threshold as business income. If the charger has its own meter and bill, and is used only for employees private vehicles, the VAT on the purchase of electricity is irrecoverable, as it relates to an onward business activity.

If the EV charger does not have its own meter and bill, the VAT on the whole electricity bill for the school should be apportioned as an overhead of the business, partly recoverable, partly irrecoverable.

School is VAT registered

The recharge is VAT standard rate, and output tax is due. Input tax on electricity purchase is fully recoverable as input tax.

If you wish to obtain further details, please speak to the Indirect Tax Services team at James Cowper Kreston.

Contact Us

If you would like to arrange a virtual meeting to discuss your specific circumstances in relation to any of the above, please get in touch with your usual contact within James Cowper Kreston or contact me using the details below.

Darren O'Connor

Partner

T: +44 (0)7990 525362 | E: DOconnor@jamescowper.co.uk

The information in this newsletter must not be relied on as giving sufficient advice in any specific case.