Bates Wells Briefing for Charities & Social Enterprises | 21 August

Bates Wells highlights

Charities, Social Enterprise

The Government has published “Civil Society Strategy: Building a Future that works for everyone”.

This week’s content covers the 4 week period from 23 July to 17 August.

At a glance

The Charity Commission has published its next steps in relation to guidance for charities “connected with” non-charities.

The Investment Association has published an updated guide to charity authorised investment funds (CAIFs).

The House of Commons International Development Committee has published its “Report into Sexual Exploitation and Abuse in the Aid Sector.

The Information Commissioner’s Office is calling for views on a data sharing code of practice.

UNISON has asked the Supreme Court for leave to appeal against the Court of Appeal decision that care workers’ sleep-in shifts do not count as work time and do need to be paid in line with the national minimum wage.

The Ministry for Housing, Communities and Local Government has published a social housing Green Paper.

The Home Office has announced it is launching an independent review of the Modern Slavery Act 2015.

The Office of the Scottish Charity Regulator has announced a consultation on draft guidance for charities with investments.

Charity Commission

Consultation on guidance for charities “connected with” non-charities

The Commission has published a report on the outcome of its consultation on draft guidance about charities connected with non-charitable organisations. The Commission says that it aims to publish final guidance later this year, but first of all will make changes to the draft in order to address some of the feedback from the consultation. Some of the common themes highlighted in the consultation included:

  • the tone (and some of the content) of the draft puts too much emphasis on the risks of charities’ connections with non-charities – there should be more focus on the benefits
  • the current draft guidance is too long for busy volunteer trustees
  • where the draft summarises the Commission’s guidance on related topics such as Campaigning and Political activity guidance for charities (CC9) and Grant funding an organisation that isn’t a charity, the paraphrasing produces a result that is inconsistent with the other guidance
  • the draft guidance appears to introduce an expectation that the charity should be visibly separate from the non-charity, in branding and other terms – the basis of this is not clear and charities need more information about what they are expected to do in practice
  • the guidance is, in parts, impractical to implement for charities with wholly owned trading subsidiary companies

The Commission says that it will “run some further limited engagement to test [its] developing approach to the final guidance” and invites organisations to email the Commission if they wish to be involved in that process – BWB has volunteered to take part. The Commission has also published a blogpost by Nick Mott, Head of Policy Development, Guidance and Review, about the consultation.

Notice of intention to direct charity to wind up – Support the Heroes

The Commission has issued notice of its intention to wind up the charity Support the Heroes. This is we think the first use of the power under section 84B Charities Act 2011 where the Commission can wind up a charity if it is satisfied that the charity does not operate, or its purposes can be promoted more effectively if it ceases to operate, and exercising the power is expedient in the public interest.

Response to International Development Committee report

The Commission has issued a response to the International Development Committee’s report on sexual exploitation and abuse in the aid sector, welcoming the report’s findings.

In relation to particular recommendations, Michelle Russell of the Charity Commission commented:

  • Improving reporting – the Commission welcomes the recommendation of an increase in the quality and quantity of SI reports; there remains inadequate and inconsistent reporting
  • Commission’s funding – the Commission is pleased that the Committee recognised the challenges faced by the Commission and the need for the Commission to be resourced to meet public expectations
  • Organisational culture and sector leadership – the Commission is “particularly pleased” to see the Committee’s focus on the responsibility of charity leaders to set an organisational culture that prioritises transparency and has zero tolerance for sexual exploitation and abuse
  • Resources for safeguarding – the Commission said it is clear that the costs associated with keeping people safe is a fundamental part of delivering a high quality, safe, front-line service
  • International Aid Sector Ombudsman – the Commission “notes with interest” the recommendation that an Ombudsman be set up to fill regulatory gaps

Charity Commission safeguarding guidance

This has been updated, but only in order to reflect the changes to the law regarding disqualification of trustees.

Fraud alert

The Commission has warned charities to be alert to the risk of insider fraud.

New inquiry

The Commission has announced that it has opened an inquiry into Livingstone House Mother of the Harvest Ministries (1102286). The Commission says that it has concerns, including that it has been operating with less than a quorate number of trustees for some time, and there are potential conflicts of interest giving rise to concerns about whether connected party transactions have been properly authorised.

Interim Manager appointment

The Commission has announced that it has appointed an interim manager to Capricorn Animal Rescue and Sanctuary.

New Trustee Declaration Form

The Commission has published an updated version of its trustee declaration form which must be submitted with any new registration application. The substantive changes to the form reflect the changes to automatic disqualification which came into force on 1 August.

New automatic disqualification rules in force

The Commission has reissued its reminder of the new automatic disqualification rules for trustees and senior managers which came into force on 1 August, and how to apply for a waiver.

New annual return

The Commission has issued a further reminder to charities about the new Annual Return.

Transparency data

The Commission has published details of paid time off for its staff to spend on trade union duties.

Privacy notices

The Commission has issued privacy notices in relation to:

Charity Authorised Investment Funds

The Investment Association has published an updated guide on charity authorised investment funds (CAIFs) (dated July 2018) and a revised version of its model trust deed (dated 31 July 2018). The IA has not announced how the latest version of the guide and deed have been updated.

Tax and VAT

HMRC has published a briefing explaining a further change to HMRC’s policy on the cost share exemption (CSE) following recent legal judgments.

Charity Tax Group reports the Court of Appeal has, unfortunately, rejected Adecco’s appeal against the adverse decisions in both the First-tier Tribunal and the Upper Tribunal, that VAT is chargeable on the staff remuneration element of a payroll charge made via a staff agency/bureau.

Oliver Hunt from BWB’s Charity & Social Enterprise team has worked with Big Society Capital to develop a new guide which explains to charities what forms of tax relief might be available and how they can position themselves to benefit from them. Entitled “A Simple Guide to Tax Reliefs: An overview of tax reliefs for investing in charities and social enterprises”, the guide is an easy-to-access handbook which is designed to explain everything from Social Investment Tax Relief and Enterprise Investment Scheme, through to IFSAs and Gift Aid. The launch of the guide is part of a wider campaign which aims to help social enterprises benefit from Social Investment Tax Relief. This launch follows the release of last year’s “Financial Promotions” guide, which was also produced in collaboration with Big Society Capital.


Luke Fletcher, partner in our Charity and Social Enterprise team, has offered his views to Civil Society as to how, in future, assets of community value should be dealt with in the event that charitable organisations enter the administration process. Examining the fate of Hastings Pier Charity – so far the only community benefit society to enter administration – Civil Society’s article probes the sale of the charity’s largest asset (Hastings Pier) to private businessman Sheikh Abid Guizar. Remarking that the administration process and subsequent sale was “conducted properly”, Luke asks whether “there should be a separate administration process for charitable organisations”. In his view, this could put more “emphasis on ensuring that asset-locked resources, where possible, end up in the hands of other charitable organisations”.


The Government has published “Civil Society Strategy: Building a Future that works for everyone”. NCVO has published:

  • this summary, commenting that “the majority of the strategy repeats existing commitments or, at most, builds on work that is already under way”.
  • Blogs summarising what the strategy says about key topics including regulation, campaigning, volunteering, public services and funding and finance.


EU funding

The government has announced it:

  • has extended to 2020 the guarantee it gave in 2016 for UK organisations in receipts of EU funds where projects are agreed before the day the UK leaves the EU.
  • is also guaranteeing funding in event of a no deal for UK organisations which bid directly to the European Commission so that they can continue competing for, and securing, funding until the end of 2020.
  • will establish a UK Shared Prosperity Fund. The fund will tackle inequalities between communities by raising productivity, especially in those parts of our country whose economies are furthest behind.

Impact on the charity sector

Clare Wilkins, NPC Head of Development, has published this blogWe need to talk about Brexit”, asking if charities are talking about the issues and opportunities Brexit will throw up loudly enough?


The House of Commons International Development Committee has published its Report into Sexual Exploitation and Abuse in the Aid Sector. See above under Charity Commission for the Commission’s response.

Last month we mentioned a new 2018 version of the Working Together to Safeguard Children Guidance was published. Another useful document has also been published: Information sharing advice for practitioners providing safeguarding services (July 2018). This reflects the GDPR and DPA 2018 and has a useful ‘myth-busting guide’.

The International Development (Safeguarding Vulnerable Groups) Bill 2018 (HC BIll 243) had its first reading in the House of Commons last month. The purpose of the Bill is to make a provision in connection with the protection of children and vulnerable adults in receipt of official development assistance and disaster relief. See here for progress of the Bill.

The Parliamentary Women and Equalities Committee has published its report on sexual harassment in the workplace, highlighting how “throughout the world of work, in spite of the law, sexual harassment is an everyday, common occurrence”. The report calls on government, regulators and employers to take a more proactive role in relation to sexual harassment and calls for a change in the law in some areas.

Data protection


The Information Commissioner’s Office (ICO) is calling for views on a data sharing code of practice. The ICO wants different views on the existing code and responses in relation to where changes in data protection legislation are needed, whether the existing code strikes the right balance between data sharing and data protection, any areas of the code which are too detailed or are not detailed enough and case studies/scenarios that can be included in the updated code of practice. The ICO will accept responses until the 10 September 2018.

Freedom of information – expansion of definition of public authority

A draft bill has been published, the Freedom of Information (Extension) Bill 2017-19, which will make providers of social housing, local safeguarding children boards, Electoral Registration Officers, Returning Officers and the Housing Ombudsman “public authorities” for the purposes of the Freedom of Information Act 2000. The Bill will also make information held by persons contracting with public authorities subject to the Freedom of Information Act 2000 and will extend the powers of the Information Commissioner.


Challenge events

The Fundraising Regulator has published new guidance for anyone looking to take part in an event run by challenge event companies. It includes:

  • 10 tips for the public
  • Information for charities on which section of the Code relates to these events, and
  • where to find further information.

Fundraising Preference Service (FPS)

In a response to a written question, Tracey Crouch, Minister for Sport and Civil Society, has said “The Fundraising Regulator has said that it intends to let the FPS to operate for another year before it reviews its effectiveness.“

Other Fundraising Regulator news

The FR’s new website includes 15 new fundraising “topics” setting out “information, links and resources”. The topics are:

  • Cash collections
  • Charity shops
  • Clothing bag collections
  • Communications and advertising
  • Community fundraising and events
  • Data protection
  • Direct debit fundraising: door to door
  • Direct debit fundraising: street and private site
  • Donations
  • Grantmakers and trusts
  • Legacy fundraising
  • Lotteries and raffles
  • Online giving
  • Trustees
  • Volunteers

The process has begun to recruit a new Chair to replace Lord Grade who is stepping down in December.

The FR has published its August newsletter.


Following a consultation earlier this year, the Phone-paid Services Authority (PSA) has introduced a set of Special conditions for providers of phone-paid society lotteries. The conditions will come into force on 1 October 2018, but the PSA expects that their requirements should be met if providers start operating phone-paid society lotteries before this date. For example, the Special conditions require that promotional material must include specified information such as the prize or amount of money that consumers stand to win (or an explanation of how any prize winnings will be calculated), and an indication that use of the phone-paid service will incur charges to the user’s phone account (mobile or otherwise).

Giving Tuesday

This year’s Giving Tuesday takes place on 27 November.

Also see under Northern Ireland.


Early years

The Education Secretary has set out his vision to support a child’s early years development, in his first major speech on social mobility.


The government has published updated guidance for local authorities, maintained schools, academies and free schools on disqualification by association under the Childcare Act 2006. Hill Dickinson reports the updated guidance changes the current position so that staff should no longer be asked questions about the cautions or convictions of someone living or working in their household.

The first round of a £7.7million Curriculum Fund will provide grants to schools to help them share teaching resources with other schools.

Nine projects across the country have been awarded a share of £4million to transform the education and outcomes of children taught in alternative provision.

67 charities across England and Wales are to receive extra funding  from the Home Office’s Anti-Knife Crime Community Fund to educate young people about the dangers of carrying weapons. The recipients include The Children’s Society which will use the money to deliver school-based support.

Health and social care

UNISON has asked the Supreme Court for leave to appeal against the Court of Appeal decision that care workers’ sleep-in shifts do not count as work time and do need to be paid in line with the national minimum wage. Civil Society Media reports HM Revenue and Customs has told social care providers they must resume self-assessments of a potential £400m back-pay liability.

The Local Government Association has published a green paper and accompanying consultation, The lives we want to lead. The green paper sets out several alternatives to sustainably fund adult social care services, including:

  • Increasing income tax for taxpayers of all ages, with a 1p rise on the basic rate raising £4.4 billion in 2024-25, and increasing national insurance: a 1p rise could raise £10.4 billion in 2024-25.
  • A social care premium by means of charging the over-40s and working pensioners an earmarked contribution.
  • Allowing councils to increase council tax.

The LGA invites views on the green paper by 26 September 2018.

The government will invest nearly £4.5 million in “social prescribing” programmes to refer patients to local voluntary and community services such as walking clubs, gardening or arts activities.

In this recent blog, Iona Joy, Head of Charities at New Philanthropy Capital, argues the charity and health sectors should formalise their alliance, and highlights why charities are better placed than the statutory health system to explore new models.

Housing and homelessness

The Communities Secretary has confirmed the government’s ambition to halve rough sleeping on England’s streets by 2022 and end it altogether by 2027. The strategy will be backed by an additional £100 million and developed across government in conjunction with charities and experts. It lays out a 3-pronged approach to tackling rough sleeping, including:

  • preventing rough sleeping by providing timely support to those at risk
  • intervening to help people already on the streets get swift, targeted support
  • helping people recover, find a new home quickly and rebuild their lives

The Ministry for Housing, Communities and Local Government has published a social housing Green Paper setting out its new vision for social housing. The Green Paper is based on five key principles including:

  • Creating safe and decent homes.
  • Improving and speeding up how complaints are resolved and empowering residents to ensure that landlords are held to account.
  • Building the social homes that are needed and ensuring that those homes can act as a springboard to home ownership.

At the same time, the Ministry has begun a call for evidence seeking information to support the review of the regulatory regime for social housing. This consultation closes on 6 November 2018.

The Government has announced the next step towards the long term future of the Grenfell Tower site.

Shelter has published a report concluding that the UK’s housing and benefit system does not adequately support all hard-working families.

New Philanthropy Capital has published this blog “How are charities tackling homelessness?

Social finance

See above under Charity Authorised Investment Funds and Tax and VAT.

Mara Airoldi (Director of the Government Outcomes Lab), writing for Pioneers Post, takes a hard look at the evidence we have about the effectiveness of Social Impact Bonds. She summaries this Evidence Report titled “Building the tools for public services to secure better outcomes: Collaboration, Prevention, Innovation”. It is the first report by GO Lab into social impact bonds.

Big Society Capital published its annual review on 24 July 2018, in which it has reported a net profit of £800,000. This is the first time it has recorded a surplus since it was established in 2012.

Nick Benton (Data & Portfolio Director, Big Society Capital), reports on Big Society Capital’s updated comprehensive estimate on the size and composition of social investment in the UK. Social Investment in the UK is worth over £2.3bn, spread across 4000 transactions. The report also highlights some emerging trends.

Also see below under Scotland.

Impact economy

The government has published a policy paper “THE PRIVATE SECTOR: promoting business, finance and tech for good” which includes a section on responsible business.

BWB are actively engaged in developing the impact economy agenda, a significant element of which is businesses recognising their responsibilities as corporate citizens. We co-hosted an event recently with the GameShift consultancy looking at issues around this. Here is a blog from BWB’s David Hunter reflecting on the event and here is a joint article Responsible Business: The Edge for Action written by Chris Nichols and Philippa Hardman from Gameshift and Jim Clifford OBE and David Hunter from BWB. If you would like to be a part of the conversation, you can register your interest via email to [email protected].

 Social enterprise

See under Tax and VAT above.

The Regulator’s Community Interest Companies (CIC) Annual Report 2017 to 2018 has been published. The theme of this year’s report is around the Social Impact of CICs.

ESELA, the European Social Enterprise Law Association, has published the slides from its May 2018 annual conference “Social impact – exploring global legal trends”. ESELA’s next conference will take place in London on 12 April 2019.

See under Scotland below.

Modern slavery

The Home Office has announced it is launching an independent review of the Modern Slavery Act 2015 (MSA 2015) following the publication of a report on the economic and social costs of modern slavery estimating that it costs the UK up to £4.3 billion a year.

In July CORE and 35 other organisations, including NGOs Anti-Slavery International, Unicef and Oxfam, Supermarkets Tesco and the Co-op, and Unions the TUC and Unison signed a joint statement published by the Independent Anti-Slavery Commissioner calling on the Government to establish a central modern slavery registry. Section 54 of the Modern Slavery Act requires businesses with a turnover of £36 million or more to publish an annual statement explaining what, if anything, they are doing to address slavery and trafficking within their business and supply chains. The joint statement argues having a central registry is key to checking compliance with this. Currently there are two independent, non-government funded registries.


The Government Equalities Office has published its response to a consultation on how best to address caste discrimination in Britain. The government has decided to amend the Equality Act 2010, effectively removing the obligation on the government to legislate in this field. Instead, a more laissez-faire approach to the issue has been adopted. It will be left for case law to determine whether caste is included in the concept of race discrimination. Current EAT authority suggests that caste may be protected, to the extent that it is bound up with racial origin. The government will need to repeal section 9(5) of the Equality Act 2010 in due course.


The Companies (Miscellaneous Reporting) Regulations have been finalised and apply for financial years beginning on or after 1 January 2019.

  • They require a statement relating to the factors listed in s 172(1) of the Companies Act 2006 to be included in the strategic report companies must prepare under the Companies Act 2006 (unless they are regarded as “small” companies). Under s 172(1), when promoting the company’s success, the directors must have regard to various factors including the interests of the company’s employees and the impact of its operations on the community and environment. On 31 July, the FRC published revised guidance on the strategic report which complements the new regulations.
  • Regulations 20 to 23 of the Companies (Miscellaneous Reporting) Regulations 2018 amend the Community Interest Companies Regulations 2005 to remedy a technical gap in relation to reporting on directors’ remuneration: they come into force 21 days after the day on which the regulations are made and apply to community interest company reports for financial years ending on or after the day on which they come into force.

On 18 July, the draft Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 were published. If approved, they will require additional reporting on energy consumption and energy efficiency action by quoted companies and large unquoted companies and LLPs, from April 2019.


The Office of the Scottish Charity Regulator (OSCR) has announced a consultation on draft guidance for charities with investments. The deadline is 21st September.

OSCR has published its Annual Review for the financial year 2017-18.

During the year, OSCR assessed 1,184 applications for charitable status; the total number of charities on the OSCR register at the end of the year was 24,382. It received 506 concerns about charities from external sources during the year, an increase from 349 the previous year. Under “key issues and risks”, OSCR lists outdated legislation (it says the legislation now lags behind the rest of the UK and “the Scottish public is less well served and protected by charity law” as a consequence), insufficient funding and insufficient staff. The report says OSCR may consider charging a levy on charities but it will await the outcome of the Charity Commission’s consultation on a range of stakeholder charging models.

OSCR has published its newsletter for August.

The Scottish Government has announced six social enterprise programmes will share more than £637,000 of grant funding – bringing the total invested so far this financial year to £4.9 million.

Northern Ireland

The Charity Commission for Northern Ireland is reminding charities of the law of lotteries in Northern Ireland.

Remembering Stephen Lloyd

Over the summer, within BWB, we marked privately the anniversary of Stephen’s death. The Stephen Lloyd Awards has provided a fitting tribute to his memory, with three inspiring winners this year. Please click here for more information.




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 August 21, 2018.