1. Her Majesty’s Revenue and Customs (HMRC) has some available funds for the financial year 2006/07 aimed at the VCS. The funds are to help with the costs of activity promoting and encouraging take-up of tax credits, and tax credits renewals. This note outlines the principles and criteria for allocating funds. We invite organisations who satisfy these principles and criteria, to submit funding bids to us for consideration.
2. There is no deadline for submitting funding bids, but bids should be submitted in sufficient time to allow for approval and for the proposed work to be carried out, reported on, evaluated and any final invoices sent in by 24th March 2007. After a bid has been finalised and submitted, a decision on funding will normally be given within fourteen days.
3. Applications should take the form of a narrative proposal outlining the context, purpose, scope, and outcomes of the planned activity, supported by information about the applicant organisation and establishing its bona fides (for example, a set of the most recent audited accounts). Informal advice on potential or draft bids is available from HMRC’s Voluntary and Community Sector Funding Co-ordinator (see Paragraph 19 for contact details).
4. We will assess and prioritise funding bids against the criteria of whether they:
4.1 Concentrate extra support at a national level on organisations most likely to produce a “multiplier effect” across the VCS
4.2 Develop new approaches for target groups that are harder to reach
4.3 Target funds at areas of greatest need
4.4 Concentrate on building capacity in the VCS
A bid may qualify for funding, at HMRC's discretion, if it satisfies one or more of these criteria and the bidder is a qualifying organisation, as defined in Paragraph 5.
5. A qualifying organisation must satisfy the controls, proprieties and monitoring arrangements outlined in Paragraphs 12-17 and may be, in the context of HMRC's tax credit funding for the VCS:
5.1 A key strategic partner to HMRC
e.g. accredited organisation with standards, a national profile and influence, capability to network and reach across the Sector, and a role in providing training or support across the Sector
5.2 A lead partner to HMRC
e.g. appropriate organisation with standards, local/regional profile and standing, possibly track record, reach/leverage/capacity, knowledge and ability to co-ordinate participation of other organisations
5.3 A partner to HMRC
e.g. organisation, likely local or community-based, seeking support and able to deliver
6. There are no set levels for the amount of funding available to one organisation in one year, and bids will be considered on their own merits, taking into account value for money, fairness and proportionality. By way of illustration, examples of funding granted for 2005/06 include:
Your focus for 2006/07 should be:
Other areas to focus on include:
7. Funds are offered as grant in aid (GIA) to VCS organisations, and not on any other basis or in any other form. As GIA, the funds are a contribution towards costs that VCS organisations legitimately incur on activities that are within their normal operations. The VCS organisations operate at arm’s length from HMRC, and this GIA funding helps defray their costs on activity aimed at promoting take-up of tax credits and renewals work and may include associated overhead costs.
8. Since the relationship is not one of service provision, VAT does not apply. As the funds are offered as GIA, the relationship is not one of procurement and thus neither the contractual rigors associated with service provision, nor the EU rules on tendering, apply. GIA is not a “grant”, so the rigors and controls associated with grant-giving do not apply either. Nonetheless, certain monitoring and control arrangements are required (covered in more detail at Paragraph 13 onwards).
9. Where, however, a successful bidder outsources some of the activity that qualifies for a funding contribution from the IR, the bidder VCS organisation may itself bear VAT on that element of its costs. Where that is the case, if the VCS organisation is not entitled to reclaim that VAT in its VAT Return to HMRC, the VAT borne may be included in the costs towards which HMRC offers a GIA contribution.
10. Payment is made quarterly following receipt of application for payment. Payment will only be made for a period of one financial year. It will remain open to HMRC to offer funding under a fresh agreement for a further period, subject to the availability of funds and to there being a continuing need.
11. Funding is not available for costs that are specifically funded by grants or contributions from other sources; so no GIA is available towards the cost of activity that is fully and directly funded from elsewhere. If the activity is partially funded from elsewhere, GIA may be offered as partial or match funding, not to exceed either the amount not funded from other sources, nor the overall cost of the activity.
12. VCS organisations applying to HMRC for GIA funding must pass an initial scrutiny by HMRC (e.g. into financial soundness, going-concern status, etc) and must be willing to sign up at a senior level to:
12.1 Measurable outcomes, and to report, on an agreed timetable, achievement against those outcomes
12.2 Receiving funds conditional upon need
12.3 Repaying any surplus GIA received
12.4 Safeguards against fraud and theft, any such losses not to be borne by the taxpayer
12.5 Spending the money on the intended, fit and proper, purpose; and
12.6 Accounting for how the money was spent on that purpose
13. Funds are normally released after the relevant costs have been incurred and paid out by the beneficiary organisation. Once a formal offer of GIA funds has been made and accepted, the beneficiary organisation may apply to HMRC for payment once it has incurred costs for the agreed purpose.
14. We will also consider making payments in advance in some cases, provided that:
14.1 Payment arrangements are agreed between HMRC and the beneficiary organisation
14.2 Payment arrangements are recorded in the GIA terms and conditions
14.3 Payment in advance is not novel or contentious
15. The organisation must report on how funds have been spent towards the agreed purpose and against the agreed measurable outcomes. Reports may conveniently take the form of periodic statements covering progress and outcomes, and requesting payment (in arrear or advance) for the appropriate period. A full report and financial summary must be submitted at the end of the final period.
16. In addition to the summary reports, as part of the monitoring arrangements we may call for supporting evidence, such as copies of material produced or summaries of management information. Where GIA funds have contributed towards the cost of running events (for example, training courses), we may request a presence at the event.
17. Reports and applications for payment may be made quarterly, or on such other timescale as is mutually agreed. We will release funds within 30 days of receipt of a satisfactory application for payment.
18. Complaints about our administration of GIA funding are subject to the standard HMRC complaints-handling procedures. Code of Practice 1, Putting Things Right, sets out these procedures and is available from any local tax office or from the Voluntary and Community Sector Funding Co-ordinator. Disputes, insofar as they relate to the Compact on Relations between the Government and the Voluntary Sector, may be resolved through the Compact Mediation Scheme. A leaflet giving more information about this Scheme is available from the Tax Credits Funding Co-ordinator.
19. For further information or advice on the GIA funding that HMRC can offer to VCS organisations towards activity that promotes take-up and renewals of tax credits, contact:
David Hall
HM Revenue & Customs
Room 7201 Norham House
Benton Park View
Newcastle upon Tyne
NE98 1ZZ
Tel: 0191 224 7340
E-mail: David Hall
