Bates Wells Briefing for Charities & Social Enterprises | 23 October

Bates Wells highlights

Charities, Social Enterprise

The Charity Commission has updated its guidance on reporting serious incidents. See today’s Briefing for details.

BWB have partnered with NCVO once again to host this years’ Annual Trustee Conference, ‘Good Governance, Great Organisations’.

Recent years have seen increased scrutiny of charities and their governance. It is essential that trustees ensure their organisation complies with the latest regulatory standards whilst also following best practice. Find out more and book your place below!

At a glance

The Charity Commission has published the final report of its safeguarding taskforce.

Last week the UK hosted a safeguarding summit during which Bond published a set of 12 commitments the sector will follow. Further government safeguarding measures have been announced this week.

The government has issued notices explaining the impact of a “no deal” Brexit on ownership, accounting and reporting of UK companies with an EU presence and EU companies with a presence in the UK.

Philanthropy Impact has prepared a paper setting out a rationale and proposals for living legacies, now known as a “Charitable Remainder Gift”.

Christopher McCall has written further on the topic of ethical investment.

This week is charity fraud awareness week.

Charity Commission

Guidance on reporting serious incidents

As previously circulated, the Commission has updated its guidance on reporting serious incidents. This is an update to the existing guidance – key changes include:

  • There is a more detailed section on safeguarding incidents, which contains the broader definition of safeguarding that the Commission has been using in its casework in recent months (i.e. safeguarding incidents are not just those relating to children and vulnerable adults who are beneficiaries of the charity).
  • The examples table annexed to the guidance has been updated with additional examples included, and safeguarding moved to the top of the table. Some of the safeguarding examples have been broadened in scope. There are some new examples under other headings, and there is a new heading “Incidents involving partners”.
  • In the new “What to report” section, under criminality, there is a new two-page note on what to report, including where criminality has taken place overseas.
  • Under “How to report” there is a new paragraph about incidents occurring in more than one charity, including in federated structures, which explains that the incident should be reported by each of the charities involved. However, it also says that charities can agree for one of them to make the report on behalf of all of them if it makes it clear that it has the authority to do so and tells the Commission about the action that each of the charities are taking in response to the incident.

Report of safeguarding taskforce

The Commission has published the final report of its safeguarding taskforce, which was set up in February this year, following media revelations about safeguarding in charities. The main findings of the taskforce include:

  • The deep dive did not identify any serious concerns about the charity’s or Commission’s handling of an incident at the time it was reported.
  • The Commission will undertake further analysis to assess underreporting so that it can target certain charities with regulatory advice and guidance.
  • There has been a significant increase in reporting of serious incidents relating to safeguarding since February 2018 and the initial increase has been sustained.
  • Many bulk/multiple reports did not contain the right level of details to fully assure the Commission about the safeguarding incidents reported; the taskforce wrote to those charities to ask for more information and was generally assured that those charities were handling individual incidents appropriately.
  • Looking ahead, the Commission is exploring the development of a new digital tool for reporting serious incidents to make it easier for charities to see what information is required. The Commission is also developing a checklist (which should be available in the next few weeks) to sit alongside the reporting of serious incidents guidance to help inform trustees what key information is needed when reporting different types of incident.

In a Commission press release which covers both the report of the safeguarding taskforce and the updated SIR guidance; the main message is that underreporting must now be addressed.


The Commission has announced that it has opened a new class inquiry into two connected charities, Future Vision Consortium (a registered charity) and Future Vision Care (an unregistered charitable company).

The Commission has issued a press release announcing that following the appointment of three new independent trustees, it has discharged the Interim Managers of Grangewood Educational Association.

Charity Fraud Awareness Week

The Commission is publicising the third charity fraud awareness week, which takes place this week. The main aims of the week are to: i) raise awareness of the key risks affecting the sector; ii) promote and share good counter-fraud practices; and iii) promote honesty and openness about fraud. More information can be found on the Fraud Advisory Panel website. On Friday 26 October the Commission will be working with partners to host a fraud webinar between 12 and 1pm.

Charity Register Statistics

The Commission has published the latest set of charity register statistics. These show the total number of registered charities as at 30 September 2018 to be 168,186.


NAVCA has published an e-booklet “Collaboration in practice” which sets out stories about collaborative projects NAVCA members have worked on.

Last week New Philanthropy Capital held its NPC Ignites conference. See here for summaries of some of the speeches and blogs.

Tax and VAT

Making Tax Digital

As you may know, VAT-registered businesses with a taxable turnover above the VAT threshold will have to use the Making Tax Digital service from 1 April 2019 to keep records digitally and use software to submit their VAT returns from 1 April 2019. HMRC has however allowed some bodies a longer period until 1 October 2019 – including trusts and ‘not for profit’ organisations that are not set up as a company.


The Department for Business, Energy and Industrial Strategy (BEIS) has issued two notices setting out implications of a “no-deal” for:

  • EU companies operating branches in the UK
  • UK citizens who own, manage or direct a company registered in the EU
  • UK companies and LLPs that have their central administration or principal place of business in certain EU member states which may no longer recognise their limited liability (we have flagged this previously)
  • Cross-border mergers involving UK companies which will no longer be able to take place under the Cross-Border Mergers Directive.
  • Societas Europaea that are registered in the UK
  • Accounting and reporting for: companies with parents or subsidiaries incorporated in the EU; UK businesses with a branch operating in the EU; UK companies listed on an EU market.

For more detail see these two notices Structuring your business if there’s no Brexit deal and Accounting and audit if there’s no Brexit deal.


See under Charity Commission above and Scotland below.

Last week the UK hosted a safeguarding summit. See:

During the summit Bond published a set of 12 commitments the sector will follow.

Following the summit, eight development and humanitarian organisations published a statement setting out the concrete actions they are taking to embed the commitments made by donors and international NGOs in London across all their work:

Further government measures announced  on Monday 22nd October include:

  • £2m funding for projects that raise awareness of safeguarding and improve incident handling
  • developing digital solutions that provide “simple and confidential ways for charities to report concerns and give better access to clear and consistent guidance on reporting and whistle-blowing”
  • Free training – with support from the Big Lottery Fund – so charities can “implement the highest possible safeguarding standards”
  • The appointment of Professor John Drew CBE, former Chief Executive of the Youth Justice Board of England and Wales, to chair a cross sector Safeguarding Programme Group, which will oversee the implementation of the new measures.


Charity Tax Group is publicising a paper from Philanthropy Impact setting out a rationale and proposals for a “Charitable Remainder Gift”. The paper has been submitted to HM Treasury. The paper also summarises a series of tax principles designed to encourage greater philanthropic giving and social investment.



Education Secretary Damian Hinds has vowed to take action on exclusions once Edward Timpson’s review has concluded, saying he would not rule out legislation to ensure more accountability for schools that permanently exclude children and place them in alternative provision.

Higher education

The government has announced a new measure to tackle grade inflation at universities.


Families across the country who are vulnerable to the devastating effects of knife crime and gang culture are set to receive more support from a new £5 million fund. The Supporting Families Against Youth Crime fund is open to keyworkers, community groups, teachers and other professionals working with children and young people.

Community organisations across the UK are to receive more than £5.3 million for projects countering extremist views and to build resilience within communities.

The Home Office has reopened a fund to help communities tackle hate crime. The Hate Crime Community Projects Fund has been launched for the third year, making available up to £75,000 to tackle hate crime.

Health and social care

Bates Wells Senior Associate Jonathan Pearce has written for the Law Society Gazette on the Court of Appeal’s recent judgment in the case of Royal Mencap Society v Tomlinson-Blake and Shannon v Rampersad. For the full article see here.

Social finance

See under Philanthropy above.

Nesta has launched the £3.7m Cultural Impact Development Fund (CIDF) to offer affordable unsecured finance on flexible terms to England’s arts, culture and creative organisations brining about positive social change in their communities. CIDF is supported by Access – the Foundation for Social Investment’s Growth Fund, grants from Big Lottery Fund and a loan from Big Society Capital. CIDF has a dedicated Impact Manager to work with applicants to develop their evidence base, a theory for change and a monitoring and evaluation framework.

The Financial Conduct Authority (FCA) has confirmed plans from 1 April 2019 to extend access to the Financial Ombudsman Service (‘the ombudsman service’) to more small and medium-sized enterprises (SMEs) including charities and trusts. The changes will mean that SMEs with an annual turnover below £6.5m and fewer than 50 employees, or an annual balance sheet below £5m will now be able to refer unresolved complaints to the ombudsman service.

Christopher McCall, writing for Civil Society, explores duties of trustees and suggests that wise trustees may see the pursuit of ethical trends in investment as a positive mechanism for protection against loss rather than a choice of perceived virtue as against financial reward. BWB Partner Luke Fletcher comments “With the recent publication of the IPCC report calling for urgent action to keep global temperatures within 1.5°C, it is salutary to think that the leading case on responsible investment is now nearly thirty years old. What Christopher McCall QC suggests in his article is that, if we are to seek guidance in case law about the nature of trustee investment duties when it comes to climate change over the next thirty years, and other areas of potential conflict with objects, we either need to interpret and apply the principles in the cases with some imagination to our new circumstances or we need a new court decision to clarify the law.”

Rebecca Claydon (Advisor, BWB Compliance), explores the Financial Conduct Authority’s Green Finance paper which discusses how regulatory focus on the effects of climate change impacts financial markets. The paper identifies four key areas for greater regulatory attention which includes a new requirement on firms to publicly report how they manage climate change risks.


The Regulator of Social Housing has published the sixth edition of the Sector Risk Profile 2018. Designed to assist registered providers of social housing, board members and others, the report sets out the strategic and financial risks currently facing the social housing sector.

Equality and human rights law

The Open University Law School’s Open Justice Centre has developed a prototype online learning module in discrimination and human rights law training for charities.


The Office of the Scottish Charity Regulator (OSCR) is publicising Charity Fraud Awareness Week (see Charity Commission news item above).

OSCR has published a blog called “Safeguarding and beyond: working together to build good practice” by Jude Turbyne, OSCR’s Head of Engagement. Although OSCR’s interim safeguarding guidance, published earlier this year, makes it clear that the remit of the guidance is to cover safeguarding children and vulnerable adults, the blog takes a closer line to that of the Charity Commission by stating that “it is also essential that charities are protecting all those they are working with, be they staff volunteers, beneficiaries, visitors, contractors, and so on.“

Northern Ireland

The Charity Commission for Northern Ireland (CCNI) has confirmed the closure of NI charity Rehabilitate Youth Ireland, following the decision of the charity’s Interim Manager to close it down. The statutory inquiry into the governance and administration of the charity remains ongoing.

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 October 23, 2018.