NMC Annual Report and Accounts 2013 - 14

75 We understand the significant hardship nurses and midwives face in making a
lump sum payment in these tough economic times. We have listened to nurses,
midwives and their professional bodies, along with the Health Committee, and
have committed to introducing phased payments by the end of 2016 to make it
easier for nurses and midwives to pay the fee. As well as making necessary
changes to our IT system and processes, we are seeking changes to our rules so
that all who want to do so can make phased payments. We also continue to
encourage nurses and midwives to claim the tax relief to which they are entitled,
as only around 30 percent do at present.
76 At 31 March 2014 negotiations are ongoing with HMRC in relation to a potential
refund of income tax and National Insurance payments made in prior years in
relation to Fitness to Practise panellists. This followed a ruling by HMRC in April
2012 that HMRC now considers that the NMC’s Fitness to Practise panellists are
not classed as office-holders and therefore employees for income tax and National
Insurance purposes, but consider them to be self-employed. The amount of the
potential refund is yet to be established and therefore it is not disclosed as a
contingent asset in the financial statements.
Reserves policy
77 The NMC has had a risk-based reserves policy in place since September 2012
which provides that our free reserves level should be based on an assessment of
the financial impact of the risks faced by the NMC, plus an amount to cover our
estimated share of the pension deficit. Free reserves are that part of a charity’s
unrestricted funds that are freely available to spend, that is, excluding restricted
funds, tangible fixed assets and amounts designated for essential future spending.
78 Until September 2012, the NMC’s reserves policy required that free reserves
should equate to at least three months’ worth of budgeted operating expenditure,
plus an amount to cover our estimated share of the pension deficit based on the
latest pension scheme valuation.
79 The reserves policy is reviewed annually by the Council as part of the business
planning process and as a core component of the NMC’s financial strategy. The
Council considers the latest assessment and quantification of major risks, and
agrees an appropriate range in which the risk-based element of reserves (also
known as ‘available free reserves’) should be maintained. This methodology gives
rise to a lower reserves requirement than was the case under the previous policy.
80 In March 2014 the Council reviewed the risks underpinning the reserves policy and
agreed that the target range of available free reserves should continue to be held
in a range of £10 million to £25 million.
81 This level of reserves is considered sufficient to meet the NMC’s operating
priorities and working capital requirements in the event of a significant unplanned
circumstance, whilst alternative funding is secured.
82 The Council’s financial strategy is based in part on the projection that available
free reserves should be restored to a minimum level of £10 million by January
2016, which is one of the conditions attaching to the Department of Health grant of
£20 million.
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