Charities: Reportable information: Account balance or value
IEIM404790:Charities: Reportable information: Account balance or value
For charitable trusts most equity interests will be the grants made to beneficiaries.
For grants paid in a single instalment the reportable information will be the value of the grant paid to the account holder (recipient) in the calendar year.
For grants paid in instalments the reportable information will be the grant instalments paid during the calendar year, and the amount outstanding at the end of the year for payment in future years.
An equity interest is also deemed to be held by the settlor (if any) and any individual who exercises ultimate effective control over the trust. The account value for such accounts will be the value of their interest. Where there is no arrangement entitling the person concerned to a financial interest in the charity, the deemed equity interest will have no value and the reportable account value will be nil.
For charitable companies the amount of any equity interest to be reported is the value calculated by the Financial Institution for the purpose that requires the most frequent determination of value. Please see IEIM402120.
In the case of charitable companies that have issued equity capital the reportable account value will generally be the value which is potentially repayable by the charity to the holder of the equity interest.
Debt interest in an investment entity
The balance or value is the principal amount of the debt. The reportable information will also include any amounts repaid during the year.
An account is regarded as closed according to the normal operating procedures of the Reporting Financial Institution that are consistently applied for all accounts that it maintains. For example, an equity interest in an Investment Entity would be considered closed when that interest is terminated by the transfer, surrender, redemption or cancellation of the interest or the liquidation of the entity.
An account with a balance or value equal to zero or which is negative will not be a closed account solely by reason of such a balance or value.
A grant making charitable trust can follow the process that best fits with its existing record keeping and accounting practices. For example, the trust can opt to treat an account as closed once the grant (or the final instalment of the grant) is paid, or it can treat the account as remaining open in case a further award to the same beneficiary is made. If the latter approach is followed it would not be necessary to treat a further award as the opening of a new account that would require the trust to repeat the due diligence procedures that it has previously applied to the beneficiary concerned; the trust would only need to check whether it has any indicia that there has been a change of circumstances that would suggest that the grantee’s existing self-certification needs to be updated.