Bates Wells Briefing for Charities and Social Enterprises | 6 September 2017

Bates Wells Highlights

Charities, Social Enterprise

The Charity Commission Annual Return 2017 is live and can now be completed. Separately, the Commission is consulting on changes to the Annual Return regime.

Bates Wells have partnered with NCVO to host this years’ annual trustee conference, ‘Good Governance in Action’ on 14th November. See below for more information and to book your place.

At a glance

The Charity Commission has published a group case report into Plymouth Brethren Gospel Hall Trusts and whether they satisfy the public benefit test.

HM Treasury has issued a consultation about increasing the audit thresholds for co-operative and community benefit societies.

The Fundraising Regulator has published a list showing the charities who have paid or committed to pay and those who have not paid its year 1 levy.

The Government has outlined proposals for a shared approach on data protection with the EU.

Charity Commission

2017 Annual Return and consultation                                                                                                                            

The 2017 annual return service is now available on the Commission’s website .

The Commission has also opened a consultation on the 2018 Annual Return, as part of a two-year project that is reviewing the key information that the Commission collects and displays from charities. The Commission has said that its intention is to shift to a “more dynamic annual return”, that is better targeted and easier to use for charities – those charities that are smaller and have more simple operating structures will answer fewer questions, whereas those that are larger and more complex will be required to answer more.

There are also proposed new questions asking:

  • if any staff earn over £60,000 and which income brackets they fall into – it appears this is aimed at highlighting any excessive pay to senior staff;
  • if any trustees were paid for providing professional advice, received other benefits and if any employees are former trustees; and
  • about funding received from overseas including requiring charities to break down the types of funding by country. International charities in particular may want to respond to this part of the consultation as there may be concerns about this information being misinterpreted.

The final deadline for responses to the consultation is 5pm on Friday 24 November 2017.

Official warning

The Commission has published an official warning under section 75A Charities Act 2011 to the trustees of Gurdwara Guru Nanak Parkash, Coventry (509504). The reasons given in the warning include that the trustees have failed to work collectively and to implement agreed decisions, and the trustees have failed to manage charity property responsibly.  The warning to the trustees includes that they must make and implement collective and lawful decisions about the management and administration of the charity in the interests of the charity only and ensure that the charity’s assets are managed responsibly.

New Inquiry

The Commission has announced that it has opened an inquiry into Orphan Relief Fund and Charitable Trust(803105), a charity whose objects include the provision of education and the relief of poverty for youth under the age of 21 who are suffering after the loss of one or more parents. The charity operates in a number of countries including Iraq, Pakistan and Somalia.  A Commission compliance visit in May 2017 identified that the trustees were unable to provide records to evidence a significant amount of its overseas expenditure in Iraq between 2013 and 2017, that a number of payments had been made to one of the charity’s trustees without explanation and that the charity had applied funds to activities falling outside of its objects.

Case report

The Commission has published a group case report into Plymouth Brethren Gospel Hall Trusts. The case follows the registration of the Preston Down Trust and over a hundred other Gospel Hall Trusts forming part of the Plymouth Brethren Christian Church, on the basis that all of the charities adopted a Deed of Variation (DoV) with a statement of doctrines and practices and a framework for the administration of the charity. The Commission committed to undertake a programme of post-registration monitoring of a sample of Gospel Hall Trusts one year after their registration to ensure the trustees of each charity were complying with the terms of their governing document, including the DoV, and that the trustees were complying with their duties and responsibilities under charity law. (The Commission has already carried out post-registration monitoring and published a subsequent case report onto Preston Down Trust).

Charity accounts

The Charity Commission has published updated guidance setting out how to carry out an independent examination of charity accounts. This is an update of the Commission’s previous publication published in June 2015, and takes into account comments from a public consultation on the draft guidance which ran from 3 June 2016 to 30 September 2016. Feedback from the consultation has also been published.

MoU between CC and DofE

The Commission has published a new MoU with the Department of Education.

Joint event – CC and Association of Chairs

The Commission is holding a joint event on exploring the Chair’s role in governance with the Association of Chairs on Wednesday 4 October.

Charity law cases

The First Tier Charity Tribunal has quashed a Charity Commission direction to a charity to change its name.  In 2016 the Charity Commission had ordered Cambridge Islamic College to change its name because it was considered too similar to the existing charity, Cambridge Muslim College.  Civil Society Media reports the Charity Commission has said it is considering appealing the decision.

The Tribunal has also struck out an appeal brought by a Mr Hall (it appears in relation to the charity R-U-ABLE2).  Mr Hall sought to appeal against an order made by the Commission under Section 105.  However the list of appealable decisions (set out in Sch 6 to the Charities Act 2011) does not include a decision by the Commission to make an order under Section 105 (though interestingly, a refusal by the Commission to make a s105 order is appealable). 

Co-operative and community benefit societies

HM Treasury has issued a consultation about increasing the audit thresholds for co-operative and community benefit societies. Currently, under section 83 of the Co-operative and Community Benefit Societies Act 2014 (CCBA), a registered society must, unless it is a small society, appoint one or more qualified auditors to audit its accounts and balance sheet in each financial year. However, under section 84(1) of the CCBA 2014, the members of a registered society (other than certain specified societies) may disapply that requirement by resolution if the total value of the society’s assets at the end of the preceding year of account did not exceed £2.8 million and its turnover for that preceding year did not exceed £5.6 million.  The consultation proposes to increase those figures to £5.1 million (assets) and £10.2 million (turnover) respectively. These would match the balance sheet total and turnover thresholds for a company to qualify as a small company under section 382 of the Companies Act 2006. The government says the changes would mean that over 70% of co-operatives in the UK will no longer have to undertake a full audit, “levelling the playing field between co-operatives and companies of the same size”.  The current audit requirements for credit unions will remain. The consultation closes on 22 September 2017, with the proposed changes due to take effect on 1 April 2018.

Corporate governance

BEIS has published the government’s response to the Green Paper consultation on corporate governance reform. The proposals which government intends to take forward include introducing secondary legislation to require all companies of a significant size (private as well as public) to explain how their directors comply with the requirements of section 172 of the Companies Act 2006 to have regard to employee interests and to fostering relationships with suppliers, customers and others.

Tax and VAT

The First Tier Tax Tribunal’s recent ruling in Will Woodlands v HMRC reaffirms that woodland managers should be able to claim VAT registration and VAT recovery on costs if there is clear intention to manage the woodland and sell the timber, even if the sale is delayed for many years and part of the aim is conservation not profit.


Sector implications

Third Sector reports an alliance, coordinated by Unlock Democracy and including NCVO, Friends of the Earth and Greenpeace, is urging the government to allow robust parliamentary scrutiny of the Great Repeal Bill. A group of 70 charities, NGOs and trade unions is calling on the government to ensure that the repeal bill does not result in a “power grab” by ministers and a sidelining of the devolved nations in the Brexit process.


The Local Government Association Brexit Group has issued a statement calling for simplification of the EU procurement rules post Brexit. 

Environment /Funding

The UK Government has guaranteed EU funding for another year for Scottish farmers and crofters, meaning that around 11,300 farmers will benefit from a £42 million funding extension.

Cross border disputes

The Government has published a position paper considering the provision of a cross-border judicial framework.  

Also see under Data Protection below.


This is an interesting blog by Mike Adamson, CEO of British Red Cross about lessons learned at Grenfell Tower.


Changes to the Code of Fundraising Practice

BWB’s Christine Rigby has prepared this summary of the July 2017 changes to the Code of Fundraising Practice.  

Fundraising Regulatory levy

Last week “in the interests of transparency and fairness” the Fundraising Regulator (FR) published a listwhich shows the charities who have paid or committed to pay and those who have not paid its year 1 levy.  The charities listed as non-payers comprise those who either refused to contribute to the levy, or have not responded to the FR’s communications. The list will be updated as and when any of the charities decide whether or not to pay. 

UK Aid Match

International Development Secretary, Priti Patel, has launched UK Aid Match designed to encourage the public to donate their old pound coins, which will go out of circulation in October 2017, to one of the 20 charity appeals picked to take part in the UK Aid Match. The appeals will then be match-funded by UK Aid to double the amount received for the causes.


The Fundraising Regulator has signed a new Memorandum of Understanding with the Scottish Fundraising Standards Panel, which adjudicates on complaints against charities principally registered in Scotland. The new agreement outlines how the two organisations will collaborate on areas of mutual interest, including operation of a “lead regulator” model on complaints, representation on their respective governance structures and information sharing.


Department of Education funding

The Department for Education has published its terms and conditions for any discretionary grants that it awards to external organisations.


The Department of Health has published guidance for NHS bodies on the acceptance, management and transfer of charitable funds. The guidance gives an introduction to the general principles determining the financial responsibilities of trustees of NHS charities. It outlines how funds held on trust are handled and managed, including the processes for transferring funds to other bodies.

Social finance

According to Pioneers Post, £2.7 million was invested in 40 social enterprises by Big Issue Invest in the last six months. Over half of the investee organisations were able to access social investment for the first time. The investments are supporting 53,000 beneficiaries and have helped create 1,445 jobs.

Big Society Capital’s (BSC) Douglas Sloan reports on BSC’s gathering at a social enterprise conference centre to share examples of social investment action in the West Midlands. BSC’s new strategy for social investment in the region was also discussed. In this blog post Douglas shares three themes emerging from the discussion.

This is an interesting blog about why and how New Philanthropy Capital was set up 15 years ago.

International development

BOND has published this blog “The aid sector in 2030: Challenges and changes ahead for INGOs”.  It includes commentary on the rise of “faith based actors”.

Faith based organisations

See under International development above.


See under Brexit above.

Environment Minister Thérèse Coffey has announced almost £500,000 will be awarded to community projects to tackle “the blight of littering”.  £45,000 of the fund will be exclusively dedicated to projects designed to address marine littering and help prevent the amount of plastic entering our oceans.

Data protection

The Government has outlined proposals for a shared approach on data protection with the EU.  The proposals are set out in this policy paper “The exchange and protection of personal data – a future partnership paper”.   PLC comments “The UK government’s view is based on the current alignment of the UK and EU data protection frameworks and its belief that the UK has “some of the strongest data protection standards in the world”. Whether or not this UK-EU model proves workable depends on negotiations with the EU. There may be some who consider that the UK’s surveillance and data retention regime means that it does not provide an equivalent standard of protection for personal data to that available within the EU. Ms Denham, the Information Commissioner, identified this as “an area of tension” which she hoped was “resolvable””.  Also see here for analysis by Latham & Watkins.

A council has been fined £70,000 by the Information Commissioner’s Office (ICO) for leaving vulnerable people’s personal information exposed online for five years.  The matter was only discovered when a member of the public using a search engine was inadvertently able to access and view the data with no need to log in, and was concerned that it could be used by criminals to target vulnerable people or their homes – especially as it even revealed whether or not they were still in hospital.

In the latest of the ICO’s “myth busting” blogs, the Deputy Commissioner talks about “another widely held misconception – that the new regime is an onerous imposition of unnecessary and costly red tape”.

Public procurement

See under Brexit above.

Campaigning and elections

Civil Society Media reports over 100 charity leaders have written to Tracey Crouch, Minister for Civil Society, urging her to make changes to the Lobbying Act. 


See under Fundraising above.

According to Civil Society Media, a new report recommends that Scottish arms-length external organisations (ALEOs) and private independent schools should lose their charitable rate relief.  See “The Report of the Barclay Review of Non-Domestic Rates“.

OSCR has published statistics about the number of times its Register is accessed to view the annual reports and accounts of Scottish charities.

New from Get Legal

BWB Get Legal brings you a range of top-quality, affordable legal documents, available to download and customise to your specifications. Every document has been drafted by our expert solicitors.

Legal essentials for small charities: which documents do you need?

Our document finding tool will help you to pinpoint exactly what legal essentials your charity needs. Many of the documents will be available on Get Legal, but there are also links to external resources to help ensure your charity stays compliant.

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 September 6, 2017.