Hi Mary
ALL businesses must keep accurate and adequate records of their financial affairs, down to the last penny. In fact all individuals are also expected to keep copies of paperwork that pertains to income and taxes and for some this may just mean their payslips, P60s and Bank statements, whilst for others its much more complex. A charity is covered under the business description. A quick search of HMRC's site will show a variety of links to records that need to be maintained and for how long. In addition to being governed by HMRCs regulations, they are also covered by other legislation and indeed by the rules of the Charities commission and have a duty of care to the recipients of the said charity and indeed to the Trustees who could face huge fines for not governing the charity properly to ensure such regulations and laws are followed properly.

Im staggered by the fact that your boss has such a nonchalant attitude. To the point where (on the face of it at least) I would be going above his head, or quickly searching for another job. he should be sacked!

You do not not necessarily need written contracts with suppliers, verbal agreements will suffice, although generally with larger charities there is a tendering process and lengthy documentary process and hoops to jump through before any work can commence.

You state as a charity you cannot reclaim the VAT, but there are many charities who are VAT registered so whilst Im not sure of the exact nature of this particular one Im going to answer in perhaps general terms.

If a charity wants to be self billing then it needs to follow very strict guidelines (under VAT regulations - see HMRC), issue self billing agreements on an annual basis and will therefore not need the VAT invoice from a supplier. If the charity is not able to enter into self billing agreements then they MUST get invoices from suppliers.

Any supplier who provides a service must provide an invoice/receipt showing their fee/VAT. If they are VAT registered they need to provide either a FULL VAT invoice or a simplified VAT invoice (simplified is only available in certain circumstances) - either way there are very strict rules as to what needs to be included on such paperwork (including a VAT number so you can verify it, should you need to) / when an invoice has to be provided - in terms of timing! / what the tax points are / time of supply etc - start with the VAT Guide 700, but there is a ton of information on there.

How does the charity know it is not paying too much for something if they are not being billed? Surely this is going against the charities own charter/rules and regs/governing document.

How do you know that money isnt being diverted to a member of staff's account without the paperwork?  Having paperwork helps to prevent all sorts of irregularities.

Never mind the MONEY LAUNDERING aspect, which you need to consider carefully - you may need to make a report!

So, my view is that you cannot insist on letters of agreement BUT you must have invoices and receipts from ALL suppliers - whether they are VAT registered or not. For every penny, including the milk for the staff room!