TRUSTEES' REPORT AND ACCOUNTS 2022 53
h) Properties
Freehold and leasehold properties are shown at cost. Equity housing
properties are owned by the charity, which grants a lease at a peppercorn
rent to any inspector wishing to take advantage of the scheme. The
inspector purchases an investment in the equity of the property and any
future change in the value is shared between the RSPCA and the inspector
in proportion to their shares in the property.
The inspector's share in an existing RSPCA property, or an additional
investment in an equity property, is treated by the charity as sale proceeds
for that proportion of the property sold. Depreciation is charged on the
cost of the charity's equity share of the property using a 40-year useful life.
The inspector is entitled to purchase the remaining equity owned by the
charity in the property at market value at date of sale. The equity housing
scheme is closed to new entrants.
The RSPCA undertakes an annual impairment review, and where significant
impairment is incurred, impairment losses are recognised in the SOFA
representing the write-down of the net book value (depreciated historical
cost) of the property to the revalued estimate.
i) Computers and other equipment
The RSPCA capitalises any computers, computer software, equipment
and motor vehicles, if they have a cost price above £5,000 and fulfil the
recognition criteria as per FRS 102. Assets hired as part of an operating
lease arrangement are not capitalised.
j) Depreciation
Provision for depreciation is made on cost in respect of:
(i) leasehold interests in land over the terms of the leases in equal annual
instalments except those in excess of 40 years, which are not depreciated;
(ii) completed freehold and leasehold buildings at the rate of 2.5% per annum;
(iii) computers, other equipment and motor vehicles on a straight-line basis
over their estimated useful lives, when new, of between three and 10 years.
This equates to a rate of between 10% and 33% per annum.
k) Intangible assets
Intangible assets are shown at cost. Any expenditure fulfilling the recognition
criteria of an intangible asset as per FRS 102 and the SORP with a cost price
of above £5,000 is capitalised as such. Costs in respect of the research
phase of a project are expensed as they arise. Costs in respect of the
development phase of a project are capitalised when there are adequate
technical and financial resources to complete and it is probable that future
economic benefits will arise. Development projects are amortised, on a
straight-line basis, when available for use, over their useful economic life
of between three and 10 years. They are included as intangible fixed assets.
l) Investments
Stocks and shares are measured at bid value at the balance sheet date.
Included in investments is portfolio cash held within the investment portfolios
which fluctuates with purchases and disposals of investment holdings.
Donated and legacy investment properties consist of land where development
approval is being sought or the property is being held in anticipation of
increased value and are held at their estimated fair value at the balance
sheet date. Unrealised gains and losses arising on the revaluation of
investments are, together with the realised gains and losses arising on the
sales of investments, shown in the Consolidated statement of financial
activities as net gains/(losses) on investments.
m) Stocks
Stocks are stated at the lower of cost and the net realisable value.
Provision is made for slow-moving or obsolete items.
n) Fund accounting
Endowment, restricted and unrestricted funds are disclosed separately in
the financial statements. Endowment and restricted funds are subject to
specific restrictions imposed by the donor or by the nature of the appeal
or grant. Funds formally held as restricted are transferred to unrestricted
funds (General Fund) as the original restrictions are met in accordance
with the Charities SORP (FRS 102). Where the donor restrictions are for
revenue purposes for activities normally carried out within the General
Fund, transfers are made from the restricted fund to the General Fund to
offset the costs as they are incurred. Further details are given in Note 16.
Designated funds are part of the General Fund set aside for a specific
purpose by the Board. Details of designated funds are set out in Note 18.
o) Pension costs
For the defined benefit section of the pension scheme, net interest on
the net defined benefit liability/asset is recognised in the Statement of
Financial Activities and comprises the interest cost on the defined benefit
obligation and interest income on the scheme assets, calculated by
multiplying the fair value of the scheme assets at the beginning of the
period by the rate used to discount the benefit obligations.
The difference between the interest income on the scheme assets and
the actual return on the scheme assets is recognised in other recognised
gains and losses. Actuarial gains and losses are recognised immediately in
other recognised gains and losses.
p) Taxation
As a charity, the RSPCA benefits from various exemptions from taxation
afforded by tax legislation and is not liable to corporation tax on income
or gains falling within those exemptions. Recovery is made of tax deducted
from income and from receipts under Gift Aid, and partial recovery is
also made of tax credits on UK dividend income. The charity is also able
to partially recover Value Added Tax (VAT). Expenditure subject to VAT
that is not recoverable by the charity is recorded in the accounts inclusive
of the VAT.
The RSPCA is a charity within the meaning of Para 1 Schedule 6 Finance
Act 2010. Accordingly, the RSPCA is potentially exempt from taxation in
respect of income or capital gains within categories covered by Chapter 3
of Part 11 of the Corporation Tax Act 2010 or Section 256 of the Taxation
of Chargeable Gains Act 1992, to the extent that such income or gains are
applied exclusively to charitable purposes.
RSPCA Trading Limited makes a qualifying donation of taxable profit to
the charity to the full extent allowable. Unless material any corporation
tax liability arising in RSPCA Trading Limited is included within the
resources expended by the group.
Notes to the accounts continued
Year ended 31 December 2022