Five volunteers SUSPENDED from NYMR

[rodent279]

1 hour ago, Jeremy Cumberland said:

 

1 hour ago, rodent279 said:

The NYMR is not a charity

Oh yes it is. Number 501388.

Is that the NYMR PLC, or the NYMHRT?

 

My understanding was that the NYMR PLC is the operating arm, the entity that operates the railway. The NYMHRT (and correct me if I'm wrong) is the charity, and the owner of the assets, and I believe at the start, was the sole owner of the NYMR PLC.

 

Which one sells the tickets to the attraction?

Edited May 7 by rodent279

[009 micro modeller]

25 minutes ago, Jeremy Cumberland said:

No, that's not allowed. From https://www.visitengland.com/sites/default/files/rules_on_gift_aid_for_charitable_attractions_updated_version_jan_15.pdf:

(bold as per the original)

That’s what I thought. And now that I think about it the only places that I’ve visited (and nowhere I’ve ever worked) that did something like this were selling the annual pass at a slightly higher price than the day one (probably by an amount equivalent to the 10% donation, and eligible for Gift Aid, but not actually requiring Gift Aid to be used), which is different from Gift Aid where the actual price paid by the visitor is the same as a day ticket, as we’ve been discussing.

 

27 minutes ago, Jeremy Cumberland said:

If annual pass holders then decide to make use of their free travel for a year, the railway will have additional journeys and additional passenger miles for no increase in revenue. Is there really spare capacity to absorb this extra demand?

As above, this is the main issue that I had with it as well. If it was on a small, fairly short railway that had relatively low visitor numbers and plenty of unused capacity (such that most trains run half empty, perhaps) and felt that it would benefit substantially from secondary spend etc. from returning visitors then it would make sense, but I was under the impression that the NYMR isn’t really like that and that capacity is sometimes quite tight.

 

I’m also reminded (by analogy) of a Nat Pres discussion about people who bought shares in heritage railway companies ages ago, really as a form of donation, but where the cost of servicing the shareholders/donors now substantially outweighs the value of the original donation.

 

27 minutes ago, Jeremy Cumberland said:

If ordinary day tickets aren't available, and annual passes are priced too high, ordinary day visitors may elect not to travel (and will most likely be annoyed about it), or they may travel anyway but be annoyed by the excessive fare. Annoying customers and potential customers when your product is very much a discretionary spend does not seem to me to be the way to success.

As a heritage charity (where community engagement, education etc. is important as well making money - indeed in a lot of cases it should be the reason why they need the money, not the other way round), the cost is also one more barrier to entry for a lot of potential visitors (as similarly discussed elsewhere within several museum organisations that have to charge for admission because they need the funding from admission charges, but still dislike the way that this prices people out). On the other hand, if the organisation really needs the money there may have to be a point where it is calculated that selling to a smaller number of people who can and will pay the higher price is more financially viable than selling to more people at a lower price.

 

The annual pass system is used in other museums and tourist attractions so I don’t really have a problem with it from that perspective, it’s just that in the NYMR’s operation the cost of providing extra capacity can be directly attributed to the visitors who then use that capacity (some of whom will now be repeat visitors with annual passes riding “for free”, so to speak), whereas in other kinds of museum operation adding in more visitors and needing to serve them will not particularly create capacity issues or obviously and immediately increase costs in the same way.

[009 micro modeller]

41 minutes ago, Jeremy Cumberland said:

If annual pass holders then decide to make use of their free travel for a year, the railway will have additional journeys and additional passenger miles for no increase in revenue. Is there really spare capacity to absorb this extra demand?

Picking up on this again, I suppose another consideration is that not everyone will visit again within a year of their original visit, even if they are an annual pass holder. You could even look at what percentage of people visit again, how many times, from what demographics or areas of the country etc. etc. and what effect this has overall. But that’s the sort of visitor data you probably only get if you’ve already been running the annual pass scheme for a few years.

[RJS1977]

2 hours ago, adb968008 said:

My thinking was the annual pass becomes an admission ticket to an attraction, in the same way as a theme park, like a Merlin annual pass.

 

The annual pass is not like annual railcard as its not for traveling between two set points like a regular or annual railcard ticket is. It is offering unlimited admission to anywhere in the attraction for year.

 

 

However a rail season ticket between two stations also enables the holder to travel to intermediate stations. When I commuted regularly between Reading and Bracknell, if I wanted to go to Wokingham on the Saturday, I would use my season ticket to go there rather than buying an off peak return, so the two are analagous.

 

My real concern though with regards to VAT is for those railways who sell a booked ticket where you have to return immediately on the same train you travelled out on - often with insufficient time between arrival and departure to step outside the confines of the station. To my mind, that no longer constitutes "public transport".

[jjb1970]

2 hours ago, rodent279 said:

Is that the NYMR PLC, or the NYMHRT?

 

My understanding was that the NYMR PLC is the operating arm, the entity that operates the railway. The NYMHRT (and correct me if I'm wrong) is the charity, and the owner of the assets, and I believe at the start, was the sole owner of the NYMR PLC.

 

Which one sells the tickets to the attraction?

 

That's a very common arrangement. When I worked for Lloyd's Register they were a not for profit foundation ( I believe they were the UK's biggest charity) but all of their actual service delivery was via commercial companies owned by the foundation.

[rodent279]

6 hours ago, jjb1970 said:

 

That's a very common arrangement. When I worked for Lloyd's Register they were a not for profit foundation ( I believe they were the UK's biggest charity) but all of their actual service delivery was via commercial companies owned by the foundation.

It feels a little "wrong" though, for one PLC to be able to claim gift aid on its product, when another PLC can't, purely because it is owned by a charity. It feels wrong in that to my mind the purpose behind gift aid is to benefit the charity, not the PLC.

Maybe I'm reading it wrong?

[Jeremy Cumberland]

8 hours ago, rodent279 said:

Is that the NYMR PLC, or the NYMHRT?

Ah, sorry, I was being a little too trusting of the details at the foot of the NYMR web pages.

NYMR PLC has company number 02490244

North Yorkshire Moors Railway Trust has company number 01036704 and charity number 501388.

 

There is, of course, no reason why the North Yorkshire Moors Railway Trust couldn't operate the railway, and I imagine that at one time they did. However, their current business registration (presumably reflecting their articles of association) does not include railway operation.

 

8 hours ago, rodent279 said:

Which one sells the tickets to the attraction?

Technically it would appear that annual pass fees Iwhether gift aided or not) are donations to the North Yorkshire Moors Railway Trust. I imagine that other tickets are sold by NYMR PLC.

 

I presume that as a result, NYMR PLC are operating at a considerable loss, but this is offset by grants from the North Yorkshire Moors Railway Trust. They might need to be careful here, because if HMRC think the arrangement is an attempt to avoid paying corporation tax on NYMR PLC profits, they are likely to take a very dim view of things.

 

7 hours ago, RJS1977 said:

My real concern though with regards to VAT is for those railways who sell a booked ticket where you have to return immediately on the same train you travelled out on - often with insufficient time between arrival and departure to step outside the confines of the station. To my mind, that no longer constitutes "public transport".

Since VAT guidelines (https://www.gov.uk/hmrc-internal-manuals/vat-transport/vtrans021400) specifically list Santa Specials as being VAT exempt, I don't think this is an issue. "Public transport" is not the test criterion.

[rodent279]

So effectively the NYMR PLC is being employed to collect revenue on behalf of the NYMHRT, amongst other things? If that's the arrangement, that seems well & good.

[009 micro modeller]

11 minutes ago, Jeremy Cumberland said:

Since VAT guidelines (https://www.gov.uk/hmrc-internal-manuals/vat-transport/vtrans021400) specifically list Santa Specials as being VAT exempt, I don't think this is an issue. "Public transport" is not the test criterion.

Wasn’t there a similar discussion about cruise ships or similar, which are also ‘excursions’ but not exactly public transport. Santa Specials seem an oddly specific thing to list.

 

12 minutes ago, Jeremy Cumberland said:

I presume that as a result, NYMR PLC are operating at a considerable loss, but this is offset by grants from the North Yorkshire Moors Railway Trust.

Isn’t it more usual, on heritage railways, for it to be the trading/operating company that gives grants to the charitable trust? Obviously that way round wouldn’t work in this case because of the Gift Aid angle but I’d just observe that some other museums have two charitable trusts (one operations and one collections, or similar), so both are charities and can claim Gift Aid, rather than the more convoluted arrangement here.

[Jeremy Cumberland]

30 minutes ago, 009 micro modeller said:

Santa Specials seem an oddly specific thing to list.

It seems rather a good example to me, since it is something everyone involved in heritage railways will recognise, and it covers a multitude of questions:

• Is an out and back ride VAT exempt? Yes
• Is a ride for which travelling on a train is only part of the experience VAT exempt? Yes, but see the later note regarding wine and dine trains. Being on a moving train has to be the most important element.
• Is everything that makes up the package VAT exempt, not just the rail travel part? Yes, if transport is the most important element. Mince pies, drinks and presents from Santa are specifically listed as being VAT exempt as well, when included in the price of the train ride.

This then leaves two main criteria for VAT exemption:

• Trains have to go between two or more stations where passengers can leave the train, and not be wholly within "a place of entertainment". I am not sure whether there has to be provision to leave the station, and there is certainly no requirement for passengers to actually leave the train.
• Being on a moving train must be the most important element of the ticket. Wine and dine trains get a specific mention because on many short railways the train stands still for a lot of the time, and so doesn't qualify for VAT exemption. In the context of the NYMR, I expect their wine and dine trains are VAT exempt.

I linked to the shorter guidance note in my earlier post. Here is a more detailed one: https://www.gov.uk/hmrc-internal-manuals/vat-transport/vtrans030600

 

 

17 minutes ago, 009 micro modeller said:

Isn’t it more usual, on heritage railways, for it to be the trading/operating company that gives grants to the charitable trust?

Not that I am aware of. I expect different railways adopt different structures to suit their own needs.

 

I have been closely involved with only one railway which had a "commercial" operating company majority owned by a charitable trust, and one of the main purposes of the trust was to attract donations free of tax and use them to help support the railway. The trust had no staff and did not directly engage in heritage/preservation activities. The operating company was expected to balance its books as well as possible, but it was not expected to generate profits as such. However, there were also commercial offshoots, set up as subsidiary companies, that were expected to generate profits (which went back into the railway).

[adb968008]

Quote

For example, in a decided case, a railway storage shed at a station was registered with the Museum Commission as a museum and the fare included admission to it. It contained seven tracks some 80 metres long. Four were used simply for storage but the remaining three had nose to tail high quality exhibits of historic railway engines and carriages. It was ruled that the fares were standard rated.

7 line shed suitable for 4 tender engines on each road… which railway is that ?

 

[Michael Hodgson]

12 hours ago, 31A said:

 

You're not obliged to gift aid when you buy your annual pass, or at least I wasn't when I bought mine last year - they give you the option.  I intend to buy one for this year sometime soon.

Gift aid in theory is the Government adding your income tax (but only at at basic rate) to your charitable donation.  They can't make it compulsory because if you are not a taxpayer you can't legally use gift aid.  And even as a taxpayer you not allowed to do more gift aid than your total tax - so your tax could already be fully utilised through other donations.  I don't think the authorities actually check on any of this, but the Revenue can't be losing much through such "abuse", as obviously people who are non taxpayers are unlikely to have enough money to be generous to charities

[adb968008]

11 minutes ago, Michael Hodgson said:

Gift aid in theory is the Government adding your income tax (but only at at basic rate) to your charitable donation.  They can't make it compulsory because if you are not a taxpayer you can't legally use gift aid.  And even as a taxpayer you not allowed to do more gift aid than your total tax - so your tax could already be fully utilised through other donations.  I don't think the authorities actually check on any of this, but the Revenue can't be losing much through such "abuse", as obviously people who are non taxpayers are unlikely to have enough money to be generous to charities

Unemployed people cannot use the gift aid, if they dont earn enough in the tax year. I do know people whom the IR wrote to, informing them to repay the gift aid liability from being unemployed for the entirety of that tax year.

(They were retired, without substantial income).

 

 

Edited May 8 by adb968008

[Michael Hodgson]

2 hours ago, Jeremy Cumberland said:

There is, of course, no reason why the North Yorkshire Moors Railway Trust couldn't operate the railway, and I imagine that at one time they did. However, their current business registration (presumably reflecting their articles of association) does not include railway operation.

 

 

I rather think the railway has to be operated by whatever orgnisation has approval from the regulators.

 

Preserved lines generally have an operating company set up in accordance with company law to limit the liability of directors etc, and a supporters body usually establlished as a charitable trust.  They wouldn't all do it this way unless there were sound legal/taxation reasons for the split, as apart from anything else, having two bodies involved just causes confusion, indeed on a number of lines has been the source of friction between enthisiasts (the supporters) and the operators (the company).

[Michael Hodgson]

5 minutes ago, adb968008 said:

Unemployed people cannot use the gift aid, if they dont earn enough in the tax year. I do know people whom the IR wrote to, informing them to repay the gift aid liability from being unemployed for the entirety of that tax year.

(They were retired, without substantial income).

 

 

Yes, the form you sign is a tax declaration, to the effect that you pay enough income tax to cover the gift aid, so in law they are guilty of making a false tax declaration.  People don't read the form, they just sign it.   Prosecuting people who don't have enough to live on for a few quid is not very productive - fining them only makes matters worse and of course the state would have to bear the cost if they were imprisoned for the offence.  The Revenue tends to be pragmatic and prefers to go after bigger fish, though they usually have very complex arrangments that are difficult to disentangle.

 

As a pensioner I am a tax payer, but that's ony because I have private pensions as well as full state pension.  If I had to rely on only the state I wouldn't be able to afford discretionary luxuries like buying a NYMR season ticket.

[jjb1970]

They do spot checks. A friend recieved a rather intimidating letter, I think he did the usual thing of thinking 'free money for a museum, capital idea!' and ticked the box without thinking. I never tick for obvious reasons in my current circumstances, though I say why I can't agree (I am not a UK taxpayer).

[Michael Hodgson]

19 minutes ago, jjb1970 said:

They do spot checks. A friend recieved a rather intimidating letter, I think he did the usual thing of thinking 'free money for a museum, capital idea!' and ticked the box without thinking. I never tick for obvious reasons in my current circumstances, though I say why I can't agree (I am not a UK taxpayer).

I doubt they could extradite you from SIngapore for that!

[Chris M]

It seems odd that there is so much discussion as to whether what the NYMR is doing is within the government rules or not. We can be certain that the NYMR will have taken professional advice on all of this and everything will be within the rules. It is very normal for charities to own limited companies, usually for trading purposes. The club I am a member of is a cio that owns a limited company. The company doesn't employ anyone and any profit is donated to the cio. All perfectly normal. The NYMR is obviously far more complicated but you will find all the other large heritage railways have similar set ups. So far as I am aware Gift Aid rules do have some idiosyncrasies but I can't see any organisation intentionally transgressing. Like I say, you can be sure NYMR and all other heritage railways will have taken professional advice.

[Chris M]

The gift aid has to be claimed from HMRC. I believe that  checks are made on gift aid by HMRC and if a claim is found to be fraudulent the gift aid is not given. 

 

Update. I was wrong. HMRC checks don't appear to be made in the way I thought. It does say in the HMRC rules that anyone found incorrectly claiming gift aid will be liable for the amount claimed. So the cio still gets the gift aid money but the donor will have to pay HMRC.

Edited May 8 by Chris M
Updated

[Johann Marsbar]

2 hours ago, adb968008 said:

Unemployed people cannot use the gift aid, if they dont earn enough in the tax year. I do know people whom the IR wrote to, informing them to repay the gift aid liability from being unemployed for the entirety of that tax year.

(They were retired, without substantial income).

 

 

Once my income fell below the tax threshold - which was about 8 years ago now - I contacted the organisations I had Gift Aid covenants with so they could stop claiming for it.

Will be about another 5 years before I can start offering Gift Aid again!

[Cwmtwrch]

2 hours ago, adb968008 said:

7 line shed suitable for 4 tender engines on each road… which railway is that ?

It may be the former Pullman Works at Preston Park, Brighton, which was used as temporary secure storage for a while some time after closure in the mid-1960s. If I remember correctly [which I don't guarantee!] it was open to the public occasionally on Sundays. The only available public access was by train from Brighton because of the location.

[Railpassion]

It's sad that the teak set is not going to run this year. I was hoping to travel in the restored NER open third, painted in crimson, which looks superb. 

 

 

 

Edited May 8 by Railpassion

[009 micro modeller]

7 hours ago, Jeremy Cumberland said:

Not that I am aware of. I expect different railways adopt different structures to suit their own needs.

 

I have been closely involved with only one railway which had a "commercial" operating company majority owned by a charitable trust, and one of the main purposes of the trust was to attract donations free of tax and use them to help support the railway. The trust had no staff and did not directly engage in heritage/preservation activities. The operating company was expected to balance its books as well as possible, but it was not expected to generate profits as such. However, there were also commercial offshoots, set up as subsidiary companies, that were expected to generate profits (which went back into the railway).

I thought in some cases there had been issues complying with charitable objectives if giving money to a PLC company. Though unlike the WSR/S&D Washford situation (where this point was specifically brought up, though I think there were plenty of other contentious aspects), if it’s the supporting charity for a heritage line’s operating company then a clear case should be able to be made that such a grant is in support of said objectives (assuming that the charity does actually have control over the operating company).

 

One of the museums I currently work for has two charitable trusts, one of which similarly has no staff etc. and whose function is simply to own the collection, thus safeguarding the collection in the event that the other trust (responsible for the everyday operational side, ticketing, maintenance, paying staff etc.) gets into debt. There are one or two subsidiary companies (not charities) to carry out specific functions. I understand that a similar structure is used in other heritage organisations, the reason being that previously there have been cases of museums that did not split their organisational structure in this way having to sell collection objects to repay debt incurred by the operational side. There are also what used to be local authority-run museums that have now been spun off to independent charitable trusts, but the collections continue to be owned by the local authority (I think York works like this). One of the differences with some heritage railways (probably due to the way they were originally set up) seems to be the use of PLC companies (which may imply shareholders who may disagree with what the supporting charity wants).

 

3 hours ago, Cwmtwrch said:

It may be the former Pullman Works at Preston Park, Brighton, which was used as temporary secure storage for a while some time after closure in the mid-1960s. If I remember correctly [which I don't guarantee!] it was open to the public occasionally on Sundays. The only available public access was by train from Brighton because of the location.

So a rather unique situation then, as the train ride part was British Rail, rather than a heritage railway. Not that that affects the overall point being made.

 

4 hours ago, Chris M said:

It seems odd that there is so much discussion as to whether what the NYMR is doing is within the government rules or not. We can be certain that the NYMR will have taken professional advice on all of this and everything will be within the rules.

Exactly, and I wasn’t suggesting they hadn’t, just pointing out that elsewhere there are other structures that can also be used to legitimately collect Gift Aid.

 

7 hours ago, Jeremy Cumberland said:

Wine and dine trains get a specific mention because on many short railways the train stands still for a lot of the time, and so doesn't qualify for VAT exemption.

I wonder where they draw the line though? Could they get away with it by continuously running the train up and down the line until the meal service has concluded?

 

6 hours ago, adb968008 said:

7 line shed suitable for 4 tender engines on each road… which railway is that ?

 

I can’t find the original quote to respond directly (or is it from elsewhere, rather than this thread?) but am unclear what specific difference registering with the Museums and Galleries Commission would make (and in any case it was wound up in 2000). Similarly for the small number of heritage railways where the entire line is an Accredited Museum (which is a distinction largely to do with collections management and other professional standards and not really relevant here) it doesn’t really mean that their trains operate entirely within a ‘place of entertainment’.

[Northmoor]

13 hours ago, Jeremy Cumberland said:

I presume that as a result, NYMR PLC are operating at a considerable loss, but this is offset by grants from the North Yorkshire Moors Railway Trust. They might need to be careful here, because if HMRC think the arrangement is an attempt to avoid paying corporation tax on NYMR PLC profits, they are likely to take a very dim view of things.

 

That scenario would just about ice the NYMR's cake.

• HMRC threaten to prosecute NYMR PLC for tax evasion (note, not avoidance);
• Charity Commission protest that NYMRT is not behaving in the spirit of a charity;
• Large number of volunteers barred from NYMR property, many others voluntarily staying away;
• Steam Railway and Heritage Railway magazines with double-page reports of how wonderful the latest gala weekends were, with particular excitement reserved for the first time a particular visiting loco has operated on the NYMR in BR green livery on a Wednesday.

[009 micro modeller]

20 hours ago, RJS1977 said:

My real concern though with regards to VAT is for those railways who sell a booked ticket where you have to return immediately on the same train you travelled out on - often with insufficient time between arrival and departure to step outside the confines of the station. To my mind, that no longer constitutes "public transport".

What about the ones where you can generally get on and off at all the stations, but an extension beyond the last station simply takes you to a run round loop where you cannot get off, before returning back the way you came? This is what Brecon Mountain was like before the extension was fully open, and I think Nene Valley similarly at one stage - in both cases it was clearly possible to do some sort of point-to-point journey on the rest of the line though.

 

8 minutes ago, Northmoor said:

That scenario would just about ice the NYMR's cake.

• HMRC threaten to prosecute NYMR PLC for tax evasion (note, not avoidance);
• Charity Commission protest that NYMRT is not behaving in the spirit of a charity;
• Large number of volunteers barred from NYMR property, many others voluntarily staying away;
• Steam Railway and Heritage Railway magazines with double-page reports of how wonderful the latest gala weekends were, with particular excitement reserved for the first time a particular visiting loco has operated on the NYMR in BR green livery on a Wednesday.

I particularly enjoyed the last bullet point… 😅. On the rest of it though, as @Chris M suggested earlier, even if other aspects of the NYMR are allegedly not being run well I sort of doubt that they’d do something like this without taking proper advice, especially if they have (or used to have) people working for them who come from charity or museum backgrounds, and who should know how Gift Aid works. I’m not sure that a structure involving a PLC and a charity, rather than two charities, is the most logical way to do it, but as before I think the main issue is the operational/capacity implications of a system where people are able to ride again at no additional cost, as well as the high initial price putting some people off. I can’t remember which railways or how they do it, but as I recall there are other heritage lines besides the NYMR which collect Gift Aid on fares.