This statement has been compiled in accordance with our wider vision, values and aims as an organisation in which we believe in a world in which compassion, cooperation and autonomy are the guiding principles, rather than greed and competition.

Megan nominated FoodCycle, who provide nutritious meals for unhoused people and anyone living in food poverty using excess ingredients from local supermarkets, along with good company for anyone experiencing loneliness.

Jodie nominated Tiny Tickers, a charity dedicated to improving the detection, care and treatment of babies with serious heart conditions, as well as providing support and information to their families.

Phil nominated the Vegan Land Movement, a community interest company focused on buying land used for exploitative farming practices and using it for rewilding projects.

Kate nominated Age UK Cheshire East, who support older people in the Macclesfield area. They provide support for people living with dementia and their carers, household help, counselling, and advice on finances, accessing government and local help, among other things!

Scott nominated Middlesbrough Foodbank, who provide packages of nutritionally balanced foods to people in crisis.

Genny nominated Manchester Action on Street Health, a charity providing support, advice and health services to sex workers in Manchester via a drop-in centre, a clinic, counselling services, and a van offering similar services at night to look out for people working on the street.

Jacob nominated Refugee Aid Chorlton, who provide aid for asylum seekers in the North West, particularly clothing. In 2023 they provided clothes for more than 1000 asylum seekers!

Jed nominated Yalla Co-operative, a web design and development agency owned by members between Gaza and Europe founded with the aim of using technology to solve societal problems and create bonds which transcend borders. They are currently raising money to support their members in Gaza, both to access necessities now and to rebuild their homes and lives after the war.

Simon nominated Médecins sans frontières, an organisation providing medical treatment to people affected by conflict, epidemics, disasters, or exclusion from healthcare.

Adam nominated Salford Women’s Aid, a charity based in Salford offering secure temporary accommodation to women and children who have been affected by domestic abuse, or who are at risk of forced marriage or honour-based violence. They also provide support around health, employment, finances, and legal matters.

The financial year proved to be another year of great success and growth for the co-operative, in terms of financial health & profitably and more importantly our continued and enhanced ability to support and encourage positive social change by providing quality financial services to a range of incredible clients operating in the charitable, not-for-profit and co-operative sector.

Key Financials

Turnover for the financial year ended 31 January 2022 increased by £154,149 (40.4%) to £534,911. This was driven in the main by enhanced capacity to deliver services caused by an increase in headcount which abled the organisation to grow our client base.

Gross profit & margins increased from £58,228 (15.3%) in the year ended 31 January 2022 compared to £90,558 (16.9%) in the prior financial period. The co-operative recorded a healthy £14,948 surplus before taxation for the year ended 31 January 2022, an increase of £5,987 from the previous financial year.

Societal Impact

We work with co-operatives, community interest companies, community benefit societies, charities and other non-for-profit organisations throughout the UK. See client list for just a sample of some of the amazing organisations that we work alongside.

We are a value-driven organisation, and our primary purpose is to support and encourage positive social change by providing quality financial services. We started in 2017 as a group of friends determined to help make the world a better place by using their expertise to provide top quality financial services to social change organisations.

You can read more about our vision and how we aim to achieve it here:
https://www.thirdsectoraccountancy.coop/our-vision.

Good Cause Fund

Charitable donations made in the year as part of the good cause fund were £11,550 (PY: £6,500). As a way in which we look to support and encourage positive social change, we decided to donate a percentage of our annual wage bill to good causes. In the spirit of cooperation, staff members are asked to nominate one good cause each.

Donations of £1,500 each were made to the below good causes:

• CARAG (Coventry Asylum and Refugee Action Group);
• Medicins Sans Frontieres;
• Coffee 4 Craig;
• Care UK ;
• Hope Not Hate Charitable Trust;
• Home for Good;
• Positive Action in Housing;
• Vegan Land Movement;
• Francis House Children’s Hospice;
• UK-Med; and
• St Augustines in Halifax

As part of the Sociocracy in Cooperatives Annual Conference 2022 (Sociocracy for All), we were asked to present a showcase session in which we discussed our own implementation of sociocracy and the success and challenges of implementing such a cooperative governance model during a period of rapid growth.

The session was framed as a conversation between Zig Power and Jo Roberts from Third Sector Accountancy (TSA), with Abbie Kempson from Sociocracy for All’s Co-op Circle.  The showcase session can be watched on demand here.

Sociocracy at TSA

We are uniquely organised as a worker co-operative. This means that all staff are highly motivated, interested in the sector and in their clients, and take ownership of their work. We believe that being a co-operative leads to a better outcome for us and for our clients.

We use the system of sociocracy to best function as an effective and efficient co-operative.

Sociocracy offers a decision making and governance model in line with the ethos of the cooperative identity, which honours and centres the human individual within the organisation. As values-based and principle-driven socio-economic organisations, co-ops benefit from an operating system that has a coherence and a synergy with the Cooperative Identity. Sociocracy is an approach to decision making and organizational structuring that is relatively quick and easy for a co-op or start-up group to start using. 

Sociocracy combines consent decision-making, a decentralized system of authority and intentional processes to improve our decisions and processes over time into a governance system that supports effective and efficient process while increasing connection, listening and co-creation among members.

B2C sales of goods to EU customers

Currently, if you sell goods to EU customers then the chances are you are charging UK VAT. This will be because the total of your sales to any individual EU country is under the “distance selling threshold”. If you are selling under the distance selling threshold, then it’s just like a UK sale – you charge UK VAT at the point of sale. Distance selling thresholds vary but they are usually around 35,000 Euros. If you sell to an EU country over its distance selling threshold, then you need to register for VAT in that EU country.

On 1 January 2021 Great Britain (not Northern Ireland) leaves the EU VAT system, which means that sales of goods to any EU customer will be zero rated for UK VAT. There are no distance selling thresholds, and all such sales will be subject to local VAT if they are over the de minimis threshold of 22 Euros per consignment. When your customer picks up their parcel from their local post office or other courier company, they will be charged local VAT on the value of the item which you will have declared.

Webshops will need to be reconfigured to zero rate any supplies to the EU. Supplies to the EU will be the same as supplies outside the EU. You may want to lower prices for EU customers as they will be picking up the tab for the VAT, which in many countries is higher than 20%.

B2C digital sales (“BTE sales”)

BTE sales are sales of broadcasting, telecommunications, or electronic services. Examples of BTE sales are an electronic magazine for download; access to a database behind a paywall; a webinar or video or audio streaming; or software subscriptions.

Currently, if you make BTE sales B2C to customers in the EU, then the place of supply is the EU country and VAT is payable in that country. To simplify this, you normally make a quarterly return to VAT MOSS (VAT Mini One Stop Shop) of all BTE sales to all EU countries, pay the VAT to HMRC, and HMRC pays it over to the relevant jurisdictions. But if all such sales are below 10,000 Euros, then you can just carry on charging UK VAT.

From 1 January 2021, the threshold of 10,000 Euros has gone so any BTE sale no matter how small needs to be subjected to EU VAT. To do this, you have to register with a Non-Union MOSS. UK sellers are often registering with Ireland’s Non-Union MOSS, on the grounds that the Irish speak English and so it is easier to do. So after Brexit, if you make any digital sales at all to EU customers who are not in business, you need to register with a Non-Union MOSS and pay EU VAT on those sales.

Get in touch with our VAT team if you have any questions!

But if you make B2C supplies of services from UK to outside EU, no VAT is charged as in this case the place of supply is the place of the customer, so it is outside the scope of UK VAT.

The same applies the other way round: when an EU supplier makes supplies of services to a UK customer, EU supplier charges EU VAT.

Post Brexit transition period

B2C supplies of services from UK to anywhere else in world will be outside the scope of UK VAT.

Similarly, no EU VAT will be charged on B2C supplies of services from an EU supplier to a UK customer.

Charities that have no business activities are “C” so if they receive services from the EU, that is B2C. So from 01/01/21 they will not be charged EU VAT. Neither will ordinary consumers. I suspect there will be a rush to set up professional services firms in Ireland to supply GB and NI charities and consumers.

For details on which services these relate to, See VAT Notice 741a Section 12.

Home working allowance

Employers can pay employees (including part time employees) £6 per week entirely tax and NIC free to compensate them for any incidental costs of working from home.

If employers do not pay employees anything for working from home, the employee can make a claim for £6 a week against their tax. This will be adjusted through their tax code. More information here: https://www.gov.uk/tax-relief-for-employees/working-at-home.

Tax free equipment

A temporary relief has been introduced by the government to facilitate the provision of equipment to employees to enable them to work from home, which runs from 16 March 2020 to 5 April 2021 (although it could be extended). This means that where an employee buys equipment to use at home, and the employer reimburses the exact cost of the equipment, there is now no benefit charge on the employee. This is true even if the employee gets to keep the equipment.

However, if an employer provides equipment to an employee to allow them to work from home, and subsequently allows them to keep it, then there is a tax charge. It’s better for the employees to buy and get reimbursed!

These reliefs apply where there is no significant private use. What this means, and for further details, see https://www.gov.uk/guidance/check-which-expenses-are-taxable-if-your-employee-works-from-home-due-to-coronavirus-covid-19.

Notified state aid

This is where the provider has to make a notification to the EU commission. You can only receive one form of notified state aid for any given project. Examples of notified state aid are:

• R&D tax relief under the SME scheme
• Some grant funding, such as Innovate UK
• Coronavirus Business Interruption Loan Scheme and Bounce Back Loan Scheme

This means for example that you cannot claim R&D tax relief under the SME scheme for a project that is funded by Innovate UK. CBILS and BBL are, and should be regarded as, not project specific.

De minimis state aid

This is aid which is subject to an overall de minimis which is a rolling €200,000 over a three year period. Types of de minimis state aid include:

• Seed Enterprise Investment Scheme
• Social Enterprise Investment Scheme
• Employment Allowance
• Covid-19 support grants under the Small Business Grant Fund and the Retail, Hospitality and Leisure Grant Fund (the £10k or £50k that was received via local councils)

General Block Exemption Regulations

This is aid that does not need to be notified to the EU and does not fall within the de minimis rules.

The Enterprise Investment Scheme is covered by the block exemption. This means it does not affect eligibility for other forms of state aid.

Support which is not state aid

• Coronavirus Job Retention Scheme and Job Support Scheme: these are not selective measures and so do not distort competition and are not regarded as state aid
• Future Fund
• Innovate UK’s continuity grants and loans fall under a temporary framework for state aid which applies until 31/12/20

We have commissioned Ethical Consumer Research Association (ECRA) to review the practices of the providers of three software applications that we currently rely upon; Quickbooks online, Xero and Receipt Bank. We have contacted each of the companies and invited them to comment.

Quickbooks Online

Quickbooks online is a cloud-based accounts and bookkeeping application marketed by Intuit, and is widely used by smaller scale organisations. At first glance, and given the scale of the company’s operations, Intuit come out of the ethical screening relatively well: this is not to say they are particularly good, as there are concerns about trading in oppressive regimes, political funding, company structures associated with tax avoidance, and less than fully adequate environmental reporting, although on this last point there are noted commitments to reduce the company’s carbon footprint and waste output. However, a specific accounting-related concern for Third Sector Accountancy is Intuit’s role in lobbying against the provision of a free online tax filing system by the US internal revenue service; we view this as profit motivated and ethically questionable behaviour. Intuit have not offered any comment on the ECRA report. 

Xero

Xero is similarly a cloud-based accounting and bookkeeping software application, also widely used by smaller scale organisations. Xero’s ethical rating is lower than Intuit’s, although with some important qualification: the company itself is faulted on its environmental reporting, but otherwise is not found to engage in unethical practices. However, as a publicly listed company, Xero has investors with significant shareholdings who, to put it mildly, engage in a wide range of ethically questionable practices. These investors include HSBC,  J. P. Morgan and Citicorp. 

In response, Xero say they have introduced a ‘Net Zero’ policy aimed at offsetting 100% of Xero carbon emissions. They also state that large investment institutions generally act as custodians for investors who are individuals and companies, and that as a publicly traded company they have no control over who holds or invests in Xero. Xero also assert that they have undertaken a number of initiatives under their Social Environmental Impact program, which they claim as evidence of their commitment to ethical investing. We have some sympathy for Xero’s claims, and can acknowledge their stated commitment to ethical practices. However, it remains the case that the decision to become a publicly traded company was made by Xero themselves: consequently, they are responsible for any associations that arise. Xero’s full response can be seen here. 

Receipt Bank

Receipt Bank provides a pre-accounting software package, designed to automate bookkeeping tasks. Receipt Bank’s ethical rating is low, significantly less than for Xero or Intuit, yet like Xero the business itself is faulted only for its poor standard of environmental reporting. Again, the ethical standing of Receipt Bank is significantly affected through its association with shareholders, such as Insight Venture Partners and Kennet Partners, who in turn are known to invest substantially in ethically challenged businesses. Receipt Bank have offered a correction to ECRA’s report (they say they have 10,000 clients globally, and  do have published accounts for which a non-working link was provided). However, they make no substantive rebuttal of the points made in the ECRA report. 

As in many areas of life where aspiring for an acceptable ethical stance, making an appropriate decision presents something of a dilemma: in order to function effectively the co-op has to make use of applications that effectively meet our accounting requirements, and we have found that there is an unfortunate need to trade these requirements off against our ethics policy. We have come to understand that suppliers of accountancy software, who are without question ethical in their practice and also meet our requirements, are impossible to find. At best, we can commit to continue seeking viable alternatives that meet our ethical expectations and professional requirements. We also undertake to share any information we have concerning the ethical behaviour of our software suppliers, and so allow our clients to make their own informed decisions. As it is, ethically grounded alternatives that may be suitable for organisations with less complex bookkeeping requirements are currently available, these being Gnucash (a basic, open source desktop application) and open source spreadsheet applications such as Libre Office and Open Office.