Converting to Academy Status
More and more schools are making the decision to convert to academy status. Whilst this is an exciting time for many schools, greater autonomy on the selection of important services, such as accounting, brings about many challenges.
Who is converting to Academy status?
Since the introduction of the Academies Act 2010, each passing month has seen more schools start down the path of conversion.
The latest figures from the Department for Education (DfE) show that more than 1,500 schools have applied to become an academy and over 1,300 of these applications have been approved. This number is set to rise even further as applications are now welcomed from schools that can demonstrate that they are performing well.
How will you choose to acquire your services?
According to the Department for Education (DfE), whilst converting provides you with greater autonomy over your decisions, schools becoming academies need to carefully consider how they will obtain services previously provided by the local authority (LA), this includes accountancy services.
The challenges Academies face
Converting to Academy status brings many new challenges for the governors and staff of a school.
This can range from areas such as:
- New financial systems
- Controls and procedures
- Dealing with cash flow issues
- The requirements of the Companies Acts
- The provisions of the Charities Act.
VAT implications for Academies
As many schools look to maximise income from the use of their facilities and staff expertise, VAT can become a major issue to be addressed.
- Do you rent out your playing fields and sports hall?
- Do you allow visitors to use your cafeteria?
Wherever you are charging for these services, the VAT status of the activities needs to be considered in advance to ensure that VAT legislation is complied with. More important though is the need to plan for VAT and to ensure that the school’s position is maximised.
For academies, Section 33 status now applies, but are you aware of the various options within Section 33 and what these may mean for your school, your systems and cash flows?
Our dedicated Director of VAT can advise on all aspects of VAT compliance and planning.
What’s more, have you considered and planned for the potential teacher pension liabilities that your school will inherit?
Teachers’ Pension Schemes (TPS) and Local Government Pension Schemes (LGPS) are both expensive options for Trusts. Coupled with the proposed increase in teachers’ starting salaries from 2022 this will squeeze Academies funds even further and good financial planning is a must in order to cover these costs.
Accountancy and Audit Services for Academies
You can download our Services for Schools flyer using the link to the right, or here.
These are just some of the areas that Mitchell Charlesworth can assist you with, using the depth of experience and varied technical expertise of our team, led by our Academies partners.