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58 City of Glasgow College Annual Report & Accounts 2019-20

CITY OF GLASGOW COLLEGE

NOTES TO THE FINANCIAL STATEMENTS

FOR THE 12 MONTHS ENDED 31 JULY 2020

Taxation

Provisions

Agency arrangements

Pension Schemes

The College participates in two multi-employer defined benefit pension schemes.

The College is considered to pass the tests set out in Paragraph 1 Schedule 6 Finance Act 2010

and therefore it meets the definition of a charitable company for UK corporation tax purposes.

Accordingly, the College is potentially exempt from taxation in respect of income or capital gains

received within categories covered by Chapter 3 Part 11 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.

The College acts as an agent in the collection and payment of certain Student Support Funds.

These funds are excluded from the Statement of Comprehensive Income, and movements have

been disclosed in the notes to the accounts. Where the College has more discretion in the

manner in which specific funds are disbursed, and those funds do not meet the definition of

agency funds, the income and expenditure relating to those funds are shown in the College

Income and Expenditure Account.

The College is partially exempt in respect of Value Added Tax (VAT), so that it can only recover a

minor element of VAT charged on its inputs. Irrecoverable VAT on inputs is included in the costs

of such inputs and added to the cost of tangible fixed assets as appropriate, where the inputs

themselves are tangible fixed assets by nature.

Administrative and support staff may join the Strathclyde Pension Fund, which is administered by

Glasgow City Council and which requires contributions to be made to its number 1 fund. The

Fund is a defined benefit pension scheme, providing benefits based on career average revalued

earnings, which is contracted out of the State Earnings-Related Pension Fund. Assets and

liabilities of the Fund are held separately from those of the College. Fund assets are measured

using market values. For quoted securities the current bid price is taken as market value. Fund

liabilities are measured using a projected unit method and discounted at the current rate of return

on a high quality corporate bond of equivalent term and currency to the liability.

Teaching staff may join the Scottish Teachers' Superannuation Scheme (STSS), which is

administered by the Scottish Public Pensions Agency. The College is unable to identify its share

of the underlying assets and liabilities of the STSS on a consistent and reasonable basis and

therefore, as required by FRS 102, accounts for its participation in the STSS as if it were a

defined contribution scheme. As a result, contributions are charged to the Statement of

Comprehensive Income as they arise. This is expected to result in the pension cost being a

substantially level percentage of current and future pensionable payroll. The contributions are

determined by qualified actuaries on the basis of periodic valuations using the projected unit

basis.

Provisions are recognised when the College has a present legal or constructive obligation as a

result of a past event, it is probable that a transfer of economic benefit will be required to settle

the obligation and a reliable estimate can be made of the amount of the obligation.

Index

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