LTB259/13 - CWU Accounts 2012

[TrueBlueTerrier]

CWU.org
19 April 2013

LTB259/13 - CWU Accounts 2012


No. LTB259/13
Ref: TK/SN/PM
Date: 19th April 2013


To: All Branches


Dear Colleague


CWU ACCOUNTS 2012


LTB 203/13 published the CWU Accounts 2012 and called for questions to the accounts to be forwarded to sdgs@cwu.org by no later than 17.00 on Friday the 12th April 2013. The following questions were submitted as requested by that deadline and these are reproduced exactly as they were submitted along with the appropriate response.


The questions and the answers given are listed in the order that they arrived in the department and in exactly the same format – i.e. with no deletions or additions made to the questions as they were asked.


From: East London Postal Branch


Question.1


My branch notes that in the lead-in to the accounts on page 3 HMRC you say Whist provision has been made, within the accounts, for worst case scenario based on HMRC views there will undoubtedly be the need for change in the future. What sort of a change in the future were you referring to?


Question 2


On Page 8 of the 2012 accounts in the income & Expenditure account you have set aside a potential additional PAYE/NIC/Liability of £1,805,141.
The figure you have placed in the accounts is quite specific (right down to the £141)
Is this a Tax charge to the CWU that has already been suggested by the HMRC and one that you are negotiating to reduce?


ANSWER


Q1


We have already introduced change to the way in which Branch Honoraria is being paid in that these are now paid directly from CWU HQ based on information and amounts supplied to us by Branches.


Following their initial visit HMRC then decided they wanted to visit a number of Branches and they did this in the latter half of 2012. A number of the Branches visited clearly make or made cash payments to individuals to carry out certain processes for the Branch, HMRC will be clear that in future any such payments made by any Branch will be taxable under PAYE – thus change will occur.


Q2

This is not a “tax charge to the CWU that has already been suggested by HMRC” It is a figure we have calculated. HMRC has raised a number of specific and detailed points with us, whilst these are still the matter of negotiation/discussion between us we took what HMRC had presented to us and calculated that “worst case scenario” would result in a cost of the figure quoted. That is our current view and that figure is likely to change. The figure is specific because of tax rates and interest charges being calculated to the exact penny.


We are continuing to argue with HMRC over their approach and are seeking legal advice with a view to a legal challenge on our members behalf.


From: CWU London Parcels and Stations Amal Branch




ANSWER


The Branch is incorrect; the issue of the “Property Reserve Fund” has absolutely nothing to do with the “Branch Withheld Rebate Account”. Therefore it is incorrect to assert that NEC has not adhered to the CWU Rule Book.


The line for ‘transfer to property reserve fund (2,853,012)’ does not relate to the branch withheld fund. The transfer is a paper transfer relating to the value of properties owned by branches.

The CWU records a separate property fund for the value of its properties owned (Pg 10). As outlined under Note 1f of the accounts i.e. - “The balance of the Property Reserve Fund is equated to the total cost or valuation of Land and Buildings less bank loans secured thereon by transfer to or from the General Fund and Branch Fund”.


Historically, within the accounts, the fund has only included properties purchased and/or managed directly by CWU HQ. Depending if assets have been acquired or sold during the year a paper transfer is then made to adjust the property fund. Branch properties have never been accounted for in the fund however given that they are a) of a significant figure and b) material when assessing the employers covenant they have now been included, which is why the transfer for £2,853,012 has been made.


As follows:-


Reconciliation:-
£19,731,535 cost of properties (note 5 pg 14)
less; £194,243 branch mortgages (note 15 pg 21)
£19,537,292 Value of Property Reserve (pg 10)


Reconciliation to branch transfer:-
£3,047,255 Value of Branch Properties (note 5 pg 14)
Less; £194,243 branch mortgages (note 15 pg 21
£2,853,012 Transfer to property Reserve (Section F Pg 25)




Again this has nothing to do with the withheld rebate and the assumption referred to by the Branch in that regard is incorrect.


The specific amount of interest earned has been £69,538.11p. Of this amount three Branches specifically requested assistance for recruitment purposes resulting in payments of £5,759.76p






From:London Divisional Reps


Accounts 2012 page 28 Item P Affiliations, Delegations and Donations.


The London Division would be grateful if you would explain to them.
Why it is necessary to have such a large miscellaneous amount of £37,258 in this account.


As can be seen the total expenditure of the Affiliations, Delegations and Donations is £733,720 so the miscellaneous represents over 5% of the total expenditure.


If possible would like to see more sub headings and a better breakdown of the miscellaneous in a way that gives greater transparency and allows members to see how this money was spent.


ANSWER:


Historically this is the way this item has appeared in the accounts.


However the question raises a valid point and I will examine the internal processes within the department to implement the necessary changes to provide more specific information on this issue beginning with the 2013 set of accounts.


From:London South West Postal Branch


Would you re-check the international account on page 29 of the 2012 accounts. My Branch London South West Postal believe that if the individual figures for the sub headings are correct then your auditors have made an error and the total for international activities should read £344,799 not £344,971.


I made a typing error in my question sent to you the figures should read £344,791 not £344,799 apologies.


ANSWER


The Branch is correct, in that on page 29 of the notes to the accounts the figures have been transposed to the amount of £180 and a correction will be made.


On page 23 the correct figure has been used and therefore the correction does not change any of the figures in the formal accounts


From: Mid Wales, the Marches and North Staffs CWU

In response to LTB 203/2013 it is noted that in regards to the pensions schemes, that the funding and liabilities are separately defined but with administration costs this is not the case. Therefore can this information be provided by scheme and by sub heading please.


ANSWER


The payment of admin costs for the three schemes has historically been done on differing methods, depending on the scheme. The NCUSSS have had their admin costs paid directly by the employer whereas the UCW 2001 Scheme and the CWU 2000 Scheme had the majority of their admin costs borne by the scheme. However this would be an indirect cost to the CWU as scheme sponsor as such amounts would form part of any scheme valuation.


Directly employed (CWU) staff also worked on all three schemes. This has now ended for the UCW 2001 and CWU 2000 scheme and the replacement process has changed a direct employment cost for a direct admin charge (realising a saving).


During 2012 all schemes incurred admin costs above the yearly norm as they include part year costs for actuarial triennial valuations.


For 2012 the admin costs for each scheme within the CWU Accounts are as follows, such a breakdown will be provided in this format in the CWU Accounts in future years.


Pension Administration 2012

CWU 2000 Pension
193,767
NCU SSS Pension
189,983
UCW 2001 Pension
94,901
Pension Advice
6,600
TOTAL
485,251


Section Q pg 28
485,251




From: Northern/North West London Branch


ANSWER


We do and we will continue to “complain bitterly” about the actions of HMRC in this regard. HMRC maintains a public position that once granted dispensations last indefinitely, however they, HMRC, reviews them regularly (usually at intervals of five years or less) to make sure that the conditions under which they were issued still apply. This is a direct uplift from their own guidelines.


They have singularly failed to do this, regardless of what was in the 1999 dispensation letter, they have a clear position on such matters and they have clearly failed to adhere to it. Therefore our “complaining bitterly” as the Branch puts it is no more than us asking to be treated by the HMRC in line with their own official and public guidelines and we will continue to deal with this issue in that manner.


Turning now to the specific point raised by the Branch and in particular the assertion that there is an anomaly in this matter.


The Branch is incorrect, no such anomaly exists.


For the record, if we are to take as a start point on the issue (mileage rates) that dispensation was granted in 1999 and that there is no need to report these matters to HMRC, the dispensation exists when “Payments to employees using their own vehicles on Union business (excluding travel between home and a permanent workplace, or vice-versa) at or below the Inland Revenue’s official tax rates. This is dependant upon the maintenance of accurate mileage records.


Firstly the CWU, when paying mileage rates nationally keeps accurate mileage records.


The mileage rates paid by the CWU are below the threshold level for HMRC tax payable. HMRC expects organisations to check, via their website that the mileage rates they intend to pay are within their taxable guidelines, as those we pay are and have been checked in this manner then our actions in the agreeing and paying of mileage rates are correct.


Indeed in the review being conducted by HMRC they have not once, up to this point, questioned either our approach or record keeping on this matter. Cleary we are adhering to the way HMRC expects us to operate on this issue.


If we decided we wanted to pay in excess of the rates HMRC publishes then it is clear we would need formal dialogue with them, but as we haven’t then we don’t.


There is no anomaly on the part of the CWU, any anomaly is, in our view in the approach being taken by HMRC in that we operate within their issued guidelines on mileage and this is acceptable to them yet when we operate within their official guidelines on subsistence they state this is not acceptable.


Any enquiries regarding this LTB should be addressed to Tony Kearns, Senior Deputy
General Secretary on telephone number 0208 971 7237 or email address sdgs@cwu.org.


Yours sincerely




Tony Kearns
Senior Deputy General Secretary