A Service Level Agreement (SLA) is a bilateral written agreement that defines the services and quality you expect from your MS Society group from a service provider. In many cases, the allocation or recharging of costs between the two is at best ill-defined and, in the worst case, completely artificial. The charity commission recommends using written agreements or contracts to protect both parties, but a service level agreement (SLA) between the two cost-setting entities is often absent. This is not a problem, I hear you say that anyway, we will only talk about it in Schenk aiden! The danger is that if your subsidiary does not have sufficient reserves to get the largest amount of Gift Aid, a tax bill will be created. The subsidiary does not have to pay more than it can afford and a large amount of immeasurable costs could easily become a difficult situation. On the other hand, the charity could itself bear costs related to its business activities. Not only does this mask the conduct of business activities by creating false profits, but it also creates the possibility for hmrc to argue that charity fees are not used for public utility purposes – with a possible tax debt (in the charity itself). The public perception of these objects would also be very bad. An SLA aims to clarify the position and protect against possible requests in the future. It also requires directors and management to think clearly about the allocation of costs when drawing up the agreement. In many cases, you`ll be surprised how the current process works or if it fairly reflects the cost allocations between the two entities.
You must set up an SLA for each service that is provided to people with or affected by MS and that, on behalf of your group, is provided by a professional or professional provider. A `professional or business service provider` is a person or organisation which carries out activities as an undertaking or outside its main activity, but which exercises a liberal profession in the field in which it has specialised. As the end of the month approaches and the pandemic continues to affect many organizations, you may find that your charity. We have developed a series of SLA templates that cover everything your group and service provider need to include in a written agreement. What could be the risk if you don`t? The problem is a balance between two possible problems. On the one hand, where the charity attributes costs to the commercial subsidiary that are unrelated to the commercial activities, HMRC may argue that those costs should not relate to the transaction and should not be eligible. This could become a larger taxable profit in the subsidiary. We expect your coordination team to use our SLA model to implement this agreement. An SLA is not a miracle weapon and any costs that seem to be artificially affected will always attract attention. But it will always be a factor in minimizing the risks associated with such relationships and a useful management tool to understand both the activities of the charity and the actual costs in its business subsidiary.
It`s always best to be prepared. In this case, an SLA should ideally be a written agreement between two companies, which defines the relationship between them and also defines clear guidelines and guidelines on how costs should be allocated in each entity and how to apply those costs (and when). . . .