Turnover Turnover represents rental and service charge income receivable (net of void losses), fees receivable, and amortisation of Social Housing Grant (“SHG”) under the accrual model. Rental income is recognised on the execution of tenancy agreements. Proceeds on sales are recognised on completion. Other income is recognised as receivable on the delivery of services provided. Grant Income Grants received from non-government sources are recognised using the performance model. A grant which does not impose specified future performance conditions is recognised as revenue when the grant proceeds are received or receivable. A grant that imposes specified future performance-related conditions on Arhag is recognised only when these conditions are met. A grant received before the revenue recognition criteria are satisfied is shown as a liability in the Statement of Financial Position. Interest Capitalised Interest on borrowings is capitalised to housing properties during the course of construction up to the date of practical completion of each scheme. The interest capitalised is derived from the average rate of interest payable by the association. Capitalisation of Development Costs Development staff costs based on the time spent on a scheme are capitalised up to the date of practical completion of that scheme. Only salary related costs and incremental overheads are included. Major Repairs The amount of expenditure incurred which relates to an improvement, which is defined as an increase in the net rental stream or the life of a property, has been capitalised. Expenditure incurred on other major repairs, cyclical and day-to-day repairs to housing properties is charged to the Statement of Comprehensive Income in the period in which it is incurred. Operating Leases Payments made under operating leases are recognised in the Statement of Comprehensive Income on a straight-line basis over the term of the lease. Lease incentives received are recognised in the Statement of Comprehensive Income over the term of the lease as an integral part of the total lease expense. Employee Benefits Defined contribution plans A defined contribution plan is a post-employment benefit plan under which the association pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the Statement of Comprehensive Income in the periods during which services are rendered by employees. Other short-term employee benefits The financial equivalents of any unused employee holidays at the balance sheet date are recognised and accrued as a liability. This is measured at the undiscounted salary cost of the future holiday entitlement at the balance sheet date. Taxation The association has charitable status and is therefore not subject to corporation tax on surpluses arising from charitable activities. A large proportion of the association’s social housing income, including its rent, is exempt for VAT purposes. The majority of its expenditure is subject to VAT that cannot be reclaimed, consequently amounts shown in the accounts are inclusive of VAT where applicable. In light of the change in 2019/20 to the association’s business structure, the proportion of income which relates to non-social housing will be subject to a partial exemption method to determine the recoverable input tax. This applies only to the partial exemption special method (‘PESM’). Arhag Housing Association has to ensure that only input tax incurred on goods and services used for business purposes is included in the calculations. VAT incurred directly or indirectly for non-business purposes must be excluded before the PESM calculations are made. Should there be any change in the structure of the business and/or trading patterns that prevent this method from giving a fair and reasonable recovery of input tax, this might be subject to further change. 56 ARHAG
RkJQdWJsaXNoZXIy NDA3NTg=