b'CHP financial statements 2020/2021Notes to the financial statements Turnover and revenue recognitionin net interest on the net defined benefit liability) areWhere the effect of the time value of money is material, Turnover comprises:recognised immediately in other comprehensive income.the amount expected to be required to settle the Defined benefit schemes are funded, with the assets ofobligation is recognised at present value using a pre-tax rental and service charge income receivable in the year; the scheme held separately from those of the Group, indiscount rate. The unwinding of the discount is recognised grants from local authorities and Homes England;separate trustee administered funds. Pension schemeas a finance cost in the income and expenditure account in assets are measured at fair value and liabilities arethe period it arises. income from shared ownership first tranche sales;measured on an actuarial basis using the projected unitJudgement is made around the recoverability of debt and income from properties developed for sale;credit method. The actuarial valuations are obtained ata provision is made based on the age and type of debt. grant amortisation and other services included at theleast triennially and are updated at each statement ofFormer arrears are provided in full. Current arrears are invoiced value (excluding VAT where recoverable) of financial position date.provided for based on age. goods and services supplied in the year, all of whichThe operating costs of providing retirement benefits to arise in the UK.participating employees are recognised in the accounting3Turnover, cost of sales, operatingRental income is recognised from the point whenperiods in which the benefits are earned. The relatedexpenditure and operating surplus properties under development reach practical completionfinance costs, expected return on assets and any other or otherwise become available for letting, net of any voids.changes in fair value of the assets and liabilities, areThis note breaks down the turnover, cost of sales and Service charge income is recognised when service chargerecognised in their accounting period in which they arise.operating expenditure into the different types of activities expenditure is incurred as this is the point at which theContributions to defined contribution pension schemesthat relate to social and non-social housing so that the services have been performed. Income from first trancheare charged to profit or loss as they become payable insurplus or deficit is recognised for each activity type. sales and sales of properties built for sale is recognisedaccordance with the rules of the scheme. DifferencesTurnover is recognised as follows: at the point of legal completion of the sale. Governmentbetween contributions payable in the year and thoserental and service charge income is recognised in the grants received are initially deferred and then credited toactually paid are shown as either accruals or prepaymentsperiod to which it relates net of rent and service charge turnover in the statement of comprehensive income on ain the statement of financial position.losses from voids; straight-line basis over the expected life of the asset whichRefer to note 28 for more details. they have funded.revenue grants are recognised in the statement of Gift Aid incomeInvestment propertiescomprehensive income in the same period as the Investment properties consist of commercial propertiesexpenditure to which they relate; Donations received under the Gift Aid scheme from ourand other properties not held for the social benefit or forgovernment grants received are initially deferred subsidiaries are recognised as turnover upon receipt as ituse in the business. After initial recognition investmentand then credited to turnover in the statement of relates to the principal activities of the association and isproperty is measured at its fair value based on thecomprehensive income on a straight-line basis over the eliminated on consolidation.valuation by an independent valuer who holds a recognisedexpected life of the asset which they have funded; Value Added Tax (VAT)and relevant professional qualification and has recentsales of first tranche shared ownership properties are The Group is partially exempt in relation to Valueexperience in the location and class of the investmentrecognised on legal completion. Added Tax (VAT) and accordingly is able to recover fromproperty valued. The judgement requires determining the HM Revenue and Customs part of the VAT incurredappropriate yield to be used in the valuation (6.10%). on expenditure. At the year-end VAT recoverable or payable is included in the statement of financial position.Development costs Irrecoverable VAT is accounted for in the statement ofThe anticipated costs to complete on a development comprehensive income.scheme based on anticipated construction cost, effective Employee benefitsrate of interest on loans during the construction period, legal and other costs, and the capitalisation of Short-term employee benefits and contributions to defineddevelopment costs. During 2020/2021, development costs contribution plans are recognised as an expense in theincluded 2,092k of capitalised interest. period in which they are incurred. PensionsProvisions for liabilities The Company participates in the Essex County CouncilProvisions are recognised when the group has a present Pension Scheme (ECCPF), a defined benefit scheme.obligation (legal or constructive), because of a past event, For defined benefit schemes, the amounts charged toit is probable that the group will be required to settle the operating profit are the costs arising from employeeobligation, and a reliable estimate can be made of the services rendered during the period and the cost ofamount of the obligation. plan introductions, benefit changes, settlements andThe amount recognised as a provision is the best estimate curtailments. They are included as part of staff costs. Theof the consideration required to settle the present net interest cost on the net defined benefit liability isobligation at the end of the reporting period, considering charged to profit or loss and included within finance costs.the risks and uncertainties surrounding the obligation.Remeasurements comprising actual gains and losses and the return on scheme assets (excluding amounts included 50 51'