Bates Wells Briefing for Charities & Social Enterprises | 05 July 2017

Bates Wells Highlights

Charities, Social Enterprise

Last week the High Court held that parts of statutory guidance governing the investment strategy for local government pension schemes could successfully be challenged – the Secretary of State could not impose his views on arms and the UK’s defence policy in respect of local authority pensions. Although the case was won on a narrow public law point, it is an interesting illustration of potential challenges to investment policies.

At a glance

The Charity Commission has used its new power under section 75A Charities Act 2011 to issue its first publicised warning to a charity.

HMRC has published the charity tax statistics relating to the tax year 2016-17.

The Fundraising Regulator has added new requirements to the Code of Fundraising Practice in advance of the launch later this week of the Fundraising Preference Service.

The Information Commissioner’s Office (ICO) has updated its subject access code of practice.

A company which failed to take basic steps to stop its website being attacked has been fined £60,000 by the Information Commissioner’s Office.

The recruitment company GatenbySanderson has published a report “The Chair/Chief Executive relationship: a complex marriage that can stand the test of time”.

Charity Commission

Case report and use of warning power

The Commission has used its new power under section 75A Charities Act 2011 to issue a warning to a charity. This is confirmed in its case report into National Hereditary Breast Cancer Helpline (1150183). Following a compliance visit, the Commission found a range of issues at the charity including a lack of appropriate financial controls, unauthorised payments to a trustee and no records of trustee decisions.  The trustees were issued with regulatory advice and guidance and, following their failure to fully comply with this, the charity was issued with an official warning to promote compliance. The warning specifies the actions the Commission considers the charity needs to take to resolve the outstanding and prevent further breaches. These are, to:

  • ensure that any payments to individuals are made lawfully and that any appropriate consent from the Commission is obtained beforehand
  • ensure that any loan agreement provides sufficient protection of the charity’s interests and is both reviewed and documented sufficiently
  • ensure that all decisions are properly and adequately recorded
  • ensure that the trustees alone take trustee decisions regarding the management and administration of the charity, and must delegate only in accordance with their duties
  • develop and implement sufficient financial controls to ensure the charity’s assets are not exposed to undue risk

Civil Society Media reports that at the Commission’s latest public meeting in Cardiff last week the Commission announced it is “about to embark on a more formal process” of consulting the sector about plans to introduce a levy to help fund the regulator; the regulator’s preferred system is likely to be a graduated levy system for charities with an income over £100,000 only, with the smallest charities paying £75 and the largest £1,750.

Tax and VAT

Charity Tax Group reports that HMRC has published the charity tax statistics relating to the tax year 2016-17.  The statistics include that:

  • the total amount of tax relief claimed by charities is provisionally estimated at £3.77bn, which is £50m less than in 2015/16. 
  • there was a small increase in the amount of Gift Aid claimed by charities, which rose from £1.26bn in 2015/16 to £1.27bn.

In response to the Office of Tax Simplification recent call for evidence on VAT reform, Charity Tax Group has now submitted a detailed response.  See here for a summary and access to the full response.


The recruitment company GatenbySanderson has published a report “The Chair/Chief Executive relationship: a complex marriage that can stand the test of time”.



The Government has published “Safeguarding the position of EU citizens in the UK and UK nationals in the EU”, setting out its proposals for EU nationals rights post-Brexit. Donald Tusk has formerly attacked the proposals as ‘below expectation’. BWB’s Immigration department considers the impact of this announcement here.

The UK’s post-Brexit deal with the EU

Brexit Secretary David Davis MP has opened the Queen’s Speech Debate on Brexit and foreign affairs. provides coverage of the debate, including opposition amendments.

The EU has released another six position papers as part of its published documents on Article 50 negotiations with the UK.


The LSE Brexit blog considers what rights the UK wants for its workers post-Brexit.

Charity sector implications

Nearly half of charity workers are already seeing the effects of Brexit, Third Sector reports.


Fundraising Preference Service (“FPS”)

In preparation for the launch on 6th July:

  • Charities spending £100,000 or more on fundraising should have been invited by the Fundraising Regulator (FR) to enrol on the FPS system.  
  • Smaller charities, those spending less than £100,000 per annum on fundraising, do not need to be set up on the system proactively. If a request to stop communication is processed against a smaller organisation, the FR will get in contact via the email address registered with the Charity Commission. The FR is therefore encouraging all organisations to check that these details are correct and relevant.

Code of Fundraising Practice

The Fundraising Regulator has added new requirements to the Code of Fundraising Practice in advance of the launch of the FPS. 

Statistics on giving

Regular giving and Direct Debit specialist Rapidata, has released its Charity Direct Debit Tracking Report 2017.   The report presents a positive return to more usual regular giving levels in 2017, following an anomalous year of fundraising activity for 2016, post the fundraising crisis of 2015.

Also see under Faith based organisations and Scotland below.



The government has pledged that every secondary school in the country will be offered Mental Health First Aid training by 2020.

Post 16

The House of Commons Library has published a briefing paper on proposed reforms to technical education.


The Care Quality Commission has worked with the National Federation of Women’s Institutes to develop an information leaflet for family members that care for a relative. 

The King’s Fund has published this blog “The Capped Expenditure Process explained”.  

The House of Commons Library has published a briefing paper examining the key funding pressures facing adult social care services and their impact on social care and health services.

Faith based organisations

This is an interesting Civil Society Media report about the Church of England trialling a contactless donation system in around 40 churches (to make it easier for young people to give).

Also see under Procurement and state aid below.

Local authorities

The High Court has held that statutory guidance, “Guidance on preparing and maintaining an investment strategy statement”, issued by the Secretary of State for Communities and Local Government governing the investment strategy for local government pension schemes, was outside his statutory powers. The section of the guidance that stated administering authorities under the Local Government Pension Scheme (LGPS) must not use pension policies to pursue boycotts, divestment and sanctions against foreign nationals and UK defence industries was outside the Secretary of State’s powers because it was issued for non-pensions purposes.  The case confirms a well-recognised principle that a public body must act for a proper purpose. The narrow point on which the claimants succeeded was that the statutory regime as drafted did not permit the Secretary of State to impose his views on arms and the UK’s defence policy in respect of local authority pensions. Those parts of the guidance that were based on broader political considerations could not be said to have been issued in the interests of the proper administration and management of the LGPS. ((Palestine Solidarity Campaign Ltd and another) v Secretary of State for Communities and Local Government [2017] EWHC 1502 (Admin) (22 June 2017).) 

The Local Government Association (LGA) has published guidance for local authorities, “Enterprising councils: supporting income generationThe guidance, which provides various case studies, is intended to assist councils in finding new, enterprising and innovative ways to work together using the specific powers that are available in order to turn their commercial plans into reality. The guidance includes information on markets and competition risks, particularly where local authority trading companies bid for contracts let by their parent authority. 

Social finance

Pioneers Post has helpfully picked out seven interesting things from AVPN’s wide-ranging reports. These reports seek to provide an overview of the philanthropy and social investment landscape in Asia and to be a guide for social investors with respect to opportunities in the region.

Writing for Civil Society, David Ainsworth states that the cost of raising money has grown by around 33 percent since the start of the century. He identifies two reasons for this. The first is that raising earned income is more expensive than fundraising but the former is rising faster than the latter. Secondly, and more worryingly, although fundraising expenditure is rising, income from fundraising appears to be static.

New money laundering regime

For persons or organisations required to comply with the Money Laundering Regulations 2017, the Financial Conduct Authority (FCA) has published a new webpage on the notification requirements. There are requirements to inform the FCA if undertaking money service business (MSB) or trust or company service (TCSP) activities. Details of how to notify the FCA are set out on the webpage, which also provides information on what constitutes MSB and TCSP activities.

Social enterprise

Social Enterprise UK has issued this press release about “developing a social enterprise hive for London”.  

The European Parliament has adopted a non-legislative Resolution on the European Agenda for the collaborative economy.   The collaborative (or sharing) economy is small but growing rapidly, gaining important market shares in some sectors. The new business models range from providing accommodation (such as Airbnb) and car journeys (such as Uber), to domestic services. However, the collaborative economy often raises issues concerning the application of existing legal frameworks, such as the blurring of established lines between consumer and provider, employee and self-employed, or the professional and non-professional provision of services.  The Resolution contains a number of recommendations designed to tackle these grey areas and to enhance consistency of approach across the member states.

Mutuals/employee ownership

The Employee Ownership Association has marked its 5th annual EO Day with the release of new industry data.  Research released from the White Rose Survey conducted by the Universities of Durham and Leeds have shown the growth of the sector which details a 60% increase from 2010-2017 now employing 200,000 employees across 300+ businesses with almost 70% those being in either Professional services or manufacturing.

Responsible business/responsible investment

CORE has published this blog “Why investor engagement is crucial to the fight against modern slavery”.

Data protection

The Information Commissioner’s Office has updated its subject access code of practice to reflect developments in Court of Appeal judgments given in early 2017 in the cases of Dawson-Damer and others v Taylor Wessing LLP [2017] EWCA Civ 74 and Ittihadieh v 5-11 Cheyne Gardens RTM Company Ltd and Others [2017] EWCA Civ 121. The main updates to the code concern obligations on data controllers in responding to subject access requests (SARs) in relation to the “disproportionate effort” exception and SARs made for collateral purposes. 

A company which suffered a cyber attack has been fined £60,000 by the Information Commissioner’s Office(ICO).  An investigation by the ICO found Berkshire-based Boomerang Video Ltd failed to take basic steps to stop its website being attacked, including that:

  • Boomerang Video failed to carry out regular penetration testing on its website that should have detected errors
  • The firm failed to ensure the password for the account on the WordPress section of its website was sufficiently complex
  • Boomerang Video had some information stored unencrypted and that which was encrypted could be accessed because it failed to keep the decryption key secure
  • Encrypted cardholder details and CVV numbers were held on the web server for longer than necessary

The House of Commons Library has published a briefing paper on Brexit and data protection.

Also see under Northern Ireland below.

Procurement and state aid

Charity Tax Group has issued this update about the Spanish State Aid case related to tax exemptions for the Roman Catholic Church.


In September, BWB’s Emma Dowden-Teale and Claire Whittle will be speaking in London at an Association of Chairs’ event about safeguarding.


The Equality Act 2010 (Amendment) (Disabled Access) Bill had its first reading in the House of Lords on 27 June 2017. The Bill is a private members’ bill.  If enacted, the Bill will amend the Equality Act 2010 (EqA) to improve access to public buildings by stipulating that the taking of “reasonable steps” under section 20 of the EqA (the duty to make adjustments) will require buildings to introduce a ramp, suitable for wheelchair access, in substitution for a single access step if the single access step is of less than six inches or 12 inches. (The language of the Bill is a little unclear as to precisely what this means, but no doubt this will be clarified as the Bill progresses through Parliament.)  No date has been scheduled yet for the Bill’s second reading.


The Office of the Scottish Charity Regulator (OSCR) has produced a charity registration logo that can be downloaded free of charge and used on a charity’s website, email signatures and publications, including hard copy. Every logo can be personalised with an individual Scottish charity’s number.

OSCR is publicising the new Scottish Fundraising Standards Panel website.

Northern Ireland

CCNI has announced the opening of a statutory inquiry into Growth for Adolescents and Providing Support  (Northern Ireland Charity Number 103493).

These are the slides from a conference in Northern Ireland about getting ready for the General Data Protection Regulation (GDPR). Speakers included representatives from the ICO and the Government dept responsible for implementing GDPR in Northern Ireland.

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Disclaimer – The information contained in this update is not intended to be a comprehensive update – it is our selection of the website announcements made in the week up to last Friday which we think will be of interest to charities and social enterprises. The content is necessarily of a general nature – specific advice should always be sought for specific situations

This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.

All content on this page is correct as of July 5, 2017.