From the early days it had seemed to me that Abingdon had better resources than most hydro projects. This is a fair sized, relatively prosperous town, with a variety of skills, and the site is easily accessible. Compared with other projects which had only a village or two nearby, we should be well placed to get the investment needed. If the project was viable, and we made the effort to meet plenty of people, and were clear and honest about it, the money should take care of itself. On the whole that was how it worked out. The devil lies in the detail….
As the project develops, the accounts become more complex. Our treasurer received the money, paid the bills, and kept all the records in a spreadsheet. Then when we registered for VAT it got a bit more complex, but he was able to cope. But then he got a full time job with a lot of travelling and the system was creaking.
This became clear at the AGM, and the members voted that we should use professional accountants. The accounts first needed to be transferred to a proper accounting package, which by then was a big task, better if it had been done that way from the start. So there is a need to look ahead, and seek advice at an early stage from someone with experience of keeping the accounts for this sort of organisation.
VAT registration was an obvious thing to do, because without it the capital cost would have been 20% higher, but when selling electricity the VAT rate is only 5%. We applied quite early, but they refused until we could provide more evidence that we were a going concern. That seemed OK, because VAT claims can be backdated up to 4 years. Except that when we finally put the application in and made the claim, they pointed out that 4 years is only for goods - VAT on services can only be backdated 6 months. Since nearly all our expenditure had been on services, we lost about £5000. This was very annoying, and to add insult to injury, the VAT inspector added a £750 fine for making a false claim, but after an appeal it was suspended.
The share offer
We processed the applications ourselves. Do not underestimate the effort needed! Our intention when we had all the data was that the Registry Trust would look after it, particularly bank details, because of data protection concerns.
Electronic payment would be helpful, but that requires an agency to handle it, which would cost several thousand pounds, and they would want legal verification of the prospectus. So it had to be by cheque. For a few people with no cheque book we emailed our account details.
The company address was our treasurer's home, and neither he nor I wanted hundreds of applications arriving in our letter boxes. So we rented a PO box - quite convenient as Abingdon has a collection office. However around Christmas it was very slow, with applications taking up to 3 weeks to arrive. Later, we used the accountants as our business address, but they were in Oxford so getting the applications would have been more complicated.
A man who had earlier offered to help turned out to have experience in databases, as did our chairman, so between them they constructed one for the investments. The procedure was that I collected the applications and stapled the cheque to the application form(s), and scanned it. I passed them on to him and he entered them into the database. Then he passed them back to me and I paid in the cheques. The database was the master record and I had the paper backup. It sounds straightforward, but it is easy to make mistakes and there was a lot of checking to do. I should have roped in someone else to do the checking.
We set a closing date for the shares, otherwise people may delay buying them almost indefinitely. That causes a last minute rush. We set the date as the last day of the financial year, because it we had gone into the new financial year there would have been complications over EIS tax relief. Because of the delays in the way we processed them the cheques were paid in some time later, but we were doing it ourselves rather than through an agency so the delays did not really matter. The date that matters is the one we print on the share certificate.
Our bank account was with Triodos, and they provided a facility to pay cheques in to the local Natwest. But that arrangement took ages to set up, and until then the cheques had to be posted to Triodos.