Bates Wells Briefing for Charities & Social Enterprises | 26 February

Bates Wells highlights

Charities, Social Enterprise

Philip Kirkpatrick, Head of Charity and Deputy Senior Partner at Bates Wells, has outlined a proposed new governance model for large charities – the Assured Unitary Governance Model. See today’s Briefing for more details.

This week’s Briefing covers the two week period from 11th to 22nd February.

At a glance

The Charity Commission has changed all its email addresses to drop “.gsi”.

The updated Code of Fundraising Practice will not now be published until summer 2019.

The Fundraising Regulator has announced changes to the time period charities have to action requests made by donors via the Fundraising Preference Service.

The Institute of Fundraising has published new guidance on telephone fundraising.

The Supreme Court is to hear an appeal from Mencap about social care workers on “sleep-in shifts”.

Charity Commission

Change to email addresses

The Charity Commission is changing all of its email addresses from Monday 25th February, removing the “gsi” element of the address. The Commission is recommending that the newly configured email addresses are used immediately, although there is a transitional period so that any emails sent using the old “GSI” email address will still be received and processed until 31 March 2019. From that date onwards, the old email addresses will no longer be operational.

Official Warnings

In recent weeks, the commission has issued an official warning to think tank the Institute of Economic Affairs (235351) in relation to a report about Brexit on the basis that, in the commission’s view, production and promotion of the report is campaigning and political activity that contravenes legal and regulatory requirements for charities (and see press release). The action that the commission considers should be taken by the trustees to rectify the situation is: (1) to remove the report from the charity’s website and stop promoting it (the warning notes that this was complied with when the charity was issued with the draft Official Warning and Notice of Intention to issue an Official Warning); (2) Implement a process for research reports (following peer review) to be submitted to the trustees for sign-off prior to publication, together with the communication and launch plan, to ensure that the Charity’s publications and other activities further the Charity’s educational purposes and are in accordance with the Commission’s guidance regarding campaigning and political activity set out in CC9; and (3) Provide written assurance to the Commission that IEA will not engage in campaigning and/or political activity that contravenes legal or regulatory requirements as set out in CC9.

New inquiry – Birmingham Diocesan Trust

The commission has announced that it has opened an inquiry into Birmingham Diocesan Trust, the charity which carries out the operations of the Roman Catholic Archdiocese of Birmingham. The commission says that the inquiry is focused on the charity’s safeguarding governance and the adequacy of its response to recent reviews.

Inquiry reports

The commission has published a supplementary report to the inquiry report for Helping Hands for the Needy. The original inquiry report was published in January 2015. This supplemental report describes the outcome of recovery action taken by the joint liquidators to recover funds directly from a former trustee of the charity. A settlement of £100,000 was offered and accepted.

The commission has also published its inquiry report into Save the Needy Worldwide (1160579). The commission was engaging with the charity for some time having proactively identified the charity for a compliance visit due to its international operations in high risks areas. Part of the reason for the subsequent inquiry was that one of the trustees (Trustee A) was stopped at Heathrow carrying over £12,000 in charitable funds.

Guidance – Display of Trustee Legal Names on the Charity Register

The above guidance has been amended to include further information about the display of a charity contact address on the register. The guidance says that the commission does not show trustees’ addresses on the charity register, unless the address has been provided as the public contact address for the charity. The address shown to the public does not need to be the physical location of the charity, but must be an address which is administered by the charity in respect of receiving communications in a timely manner. As the address does not need to be the physical location of the charity, the commission does not as a general rule provide dispensations for charity addresses.

Charity law cases

In the First Tier Charity Tribunal, an appeal has been brought against a decision of the Charity Commission not to discharge a protective order made in relation to the Enfield Island Village charity. What is interesting is that the appeal has not been brought by the charity but has been brought by a private company which holds charity property in its bank accounts. The Charity Commission accepted this gives the private company standing to bring the appeal. It is not clear at this stage if the charity will be added as a party to the appeal. ICRI Ltd –v- Charity Commission


Philip Kirkpatrick, Head of Charity and Deputy Senior Partner at Bates Wells has proposed a new governance model for large charities – the Assured Unitary Governance Model. This model would enable charities to move to an entirely paid trustee board, similar to that of most commercial companies but with one crucial addition: there would be a secondary or ‘assurance’ board to perform some of the functions that unpaid trustees would otherwise perform, without burdening those people with the responsibility of trusteeship. See here for the full text of Philip’s speech.

For NCVO members, NCVO has:

Tax and VAT

Charity Tax Group reports these points of interest from the most recent HMRC Charity Tax Forum:

  • Charity tax returns: HMRC officials have confirmed that as part of a compliance review 3,000 charities (those with the largest Gift Aid claims) will be asked to complete a tax return this year. HMRC will send a letter in the next few weeks, advising that the charity needs to complete a tax return. CTG will share a sample letter and further guidance in due course. Requests for tax returns will also be sent to a random sample of several hundred CASCs.
  • Corporate Offence of facilitating tax evasion: Representative bodies for CASCs and church treasurers discussed proposed draft guidance on this offence tailored for their sectors. It was agreed that discussions should be undertaken with the Charity Commission to increase awareness about the responsibilities charities have under this legislation
  • Charity Tax Commission: The Commission has now finished taking evidence and is considering its recommendations. It will be consulting with its expert advisory group (which includes CTG Chairman John Hemming) and still aims to publish its report by June 2019.

Gift Aid Small Donations Scheme

The Small Charitable Donations Act (Amendment) Order 2019 has been passed: it increases the small donations limit under the Gift Aid Small Donations Scheme (GASDS) from £20 to £30 with effect from 6 April 2019.

Making Tax Digital

HMRC has published a new document which it describes as a mythbuster explaining the truth behind some common misconceptions about Making Tax Digital.



The NHS confederation has released new guidance on the availability of medical devices post-Brexit – this guidance to NHS providers and heads of procurement details the action they need to take to safeguard the availability and supply of medical devices and clinical consumables in the event of a no-deal Brexit.

International development charities

Civil Society has published an article on funding of development charities in the event of a no deal Brexit.

BOND has flagged that a new report by the UK branch of the United Nations Association states that the UK faces “considerable challenges in maintaining its current level of influence once it has exited the EU.”

Guidance for businesses

BEIS has published guidance in the event of no-deal for the consumer goods sector. It includes content relevant to trade associations but the guidance may be useful for other businesses generally.

Impact on contracts

The High Court has held that the European Medicines Agency’s (EMA) 25-year lease of premises in Canary Wharf will not be frustrated on the UK’s departure from the EU. The EMA’s existence and functionality is governed by various EU regulations, one of which designates its headquarters in London. The EMA’s primary argument was that the UK’s departure from the EU would frustrate its lease by reason of supervening illegality. It argued that it would no longer be lawful for it to pay the rent after the UK leaves the EU because this would be ultra vires. Mr Justice Marcus Smith rejected this on the basis that while the protections conferred on the EMA by the relevant EU regulations would be reduced as a result of the UK’s departure, the EMA would still have capacity to deal with immovable property in a non-EU country and, therefore, have capacity to continue performing its obligations under the lease. As such, there was no frustration by supervening illegality. This was despite the court acknowledging that the EMA was obliged by a 2018 EU regulation to move its headquarters to Amsterdam, and that there were strong political reasons for the EMA not to remain in the UK after Brexit.

Mechanics of Brexit

The House of Commons Library has published this article on ‘What legislation is required for a ‘no deal’ Brexit?’

The House of Commons Library has published a briefing on extending the two-year Article 50 period.


Fundraising Regulator new policy to name charities

The FR has confirmed that it will name charities that it investigates following complaints. It will publish the investigations every three months, starting with the first batch in June. In March, it will also name the charities that have failed to access requests on the Fundraising Preference Service.

Code consultation

Priya Warner, Head of Policy at the Fundraising Regulator has issued a press release summarising the FR’s next steps in the consultation. In a change to the previously published timetable, the new Code will now not be published until summer 2019, and it won’t come in to effect until 3 months later.

Changes to the Fundraising Preference Service

Currently, a charity has 28 days to action requests from the public to stop communication. From 1 March this will change to 21 days. The FR says this is to bring the service in line with the Data Protection Act 2018. For more, see here.

Telephone fundraising

The Institute of Fundraising has published new guidance on telephone fundraising. ‘A Good Call’ provides “information and advice on how the telephone can be used in a range of ways to have great conversations with supporters and aims to give organisations the confidence to make the most of the telephone as a way of connecting with supporters”.

Payment services directive

The IOF has published a blog “The Payment Services Directive: What charities need to know”. This September new EU-wide legislation – Strong Customer Authentication (SCA) – is going to be implemented which will impact on online payments and donations.


Early years

The government is to give thousands of families free access to educational apps that help boost early literacy and language skills.


The government has launched the second round of the Selective Schools Expansion Fund.

T levels

Pearson and NCFE have been awarded contracts to deliver the first three T Levels from 2020. T Levels will be the technical equivalent to A Levels, combining classroom theory, practical learning and an industry placement.

Private schools

In response to a Parliamentary question, a spokesman for the Government has said there are no plans to review eligibility of private schools for charitable rate relief.

Health and social care

The Supreme Court is to hear an appeal from Mencap about social care workers on “sleep-in shifts”. In 2018, the Court of Appeal ruled it was legal to pay flat-rate fees for such shifts at rates below the minimum wage.

Health Minister Stephen Hammond has invited air ambulance charities in England to apply for a new £10 million fund for upgraded equipment and facilities.

The government has launched a new campaign, ‘Every Day Is Different’, to recruit thousands more adult social care staff.

Social finance

Social finance

Access – the Foundation for Social Investment (Access) has recently published a template loan agreement and template grant agreement as free, publicly available resources for charities, social enterprises, social investors and others. These model agreements were prepared by Bates Wells, based on model loan and grant agreements originally prepared for the Access Growth Fund, a partnership between Big Lottery Fund, Big Society Capital and Access to provide blended finance needed by charities and social enterprises to grow or diversify their business models. Bates Wells’ Sung-Hyui Park commented: “We are conscious that many smaller charities, social enterprises, social investors and intermediaries do not always have easy access to full legal services. We hope that these model documents provide a useful starting point for those who are looking for a concise and fairly short-form grant and/or loan agreements.” The model documents are available to download for free from Access’ website.

Charity pooled funds achieved negative returns for the year to December 2018 according to data published by Charity Finance magazine, although there were some gains and the trend may be turning up for 2019.

The new Heritage Impact Fund is offering up to £7m in loans to charities, social enterprises and community businesses seeking to acquire, reuse or redevelop historic buildings in the UK while delivering local economic and social benefits.

The City of London Corporation’s City Bridge Trust and UBS have built on the success of their Stepping Stones Fund (grant funding) by launching the Stepping Stones Finance Facility: a £500,000 loan fund for charities and social enterprises who have successfully completed the work they were supported to deliver through the Stepping Stones Fund.


The government has announced funding of £3 million to be spent in 16 boroughs, towns and cities across England to encourage more people to get involved in local issues.

International development

DfID has announced a £47 million package of support aimed at improving tax systems in developing countries.

The International Center for Not-for-Profit Law (ICNL) has published its latest report: “The State of Civic Freedoms in the Middle East and North Africa: Access to Associational Rights in Morocco, Tunisia, Lebanon, Jordan, and Kuwait.”.

Faith based organisations

See item relating to church organisations under Tax and VAT above.


See items relating to CASCs under Tax and VAT above.


OSCR has published its newsletter, OSCR Reporter, for February. The content is mainly news items which we have already covered in previous website reviews, including the Scottish charity law consultation and the Tayside NHS Board Inquiry Report.

Northern Ireland

CCNI has signposted some information on the charitable exemption from business rates.


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 February 26, 2019.