Bates Wells Briefing for Charities & Social Enterprises | 2 July

Bates Wells highlights

Services
Charity
Type
Update

On 1st August, changes come into force in relation to regulation of higher education charities registered with the Office for Students. See today’s Briefing for more details.

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At a glance

HMRC has published its annual update of UK charity tax relief statistics.

Secretary of State Rory Stewart has launched a report on the UK’s progress towards the Sustainable Development Goals.   

Schools Minister Lord Agnew has issued an updated handbook to help bolster the financial management and governance of academy schools.  

The Prime Minister has launched a new drive to tackle barriers faced by disabled people. 

The Government has launched a Law Commission review into marriage ceremonies in England and Wales.  

Charity Commission

Regulation of higher education institutions as charities

The commission has posted a blog written jointly by commission CEO Helen Stephenson and Office for Students (OfS) CEO Nicola Dandridge about the regulation of higher education institutions as charities. This follows the making of The Higher Education and Research Act 2017 (Further Implementation etc.) Regulations 2019 (SI 2019/1027) which make amendments to Schedule 3 to the Charities Act 2011 in relation to exempt charities that have the OfS as their principal regulator. The amendments in the 2019 Regulations, which come into force on 1 August 2019, will enable any higher education provider registered with the OfS to become an exempt charity by an Order issued by the Privy Council. The Regulations will also remove exempt charity status from any higher education provider that is not registered with the OfS.

Official Warning to IEA withdrawn

Civil Society is reporting that the commission has withdrawn the Official Warning given to the Institute of Economic Affairs earlier this year in relation to a report about Brexit, in light of the steps the charity has taken to rectify the situation. The commission will usually publish a warning for a period of one year, but it has discretion under the legislative provisions to vary or withdraw the warning.

New inquiries

The commission has announced that it has opened an inquiry into the governance and administration of Sree Bharathalaya (1138682) a charity which advances education and provides recreational facilities for the benefit of asylum seekers, refugees and the ethnic minority community in Coventry. The commission previously included the charity in the “double defaulters” class inquiry for failing to comply with annual reporting obligations for three consecutive years, but then opened a new investigation in 2017 due to continued non-compliance. There have also been discrepancies between the information filed with the commission and with Companies House. The commission says it could not announce the inquiry earlier, due to a separate inquiry by HMRC.

Inquiry reports

Name of charityBrief descriptionAnything unusual e.g. unusual facts or novel/rare use of Commission’s powers
Royal Air Force (RAF) mess charitiesInquiry reportPress releaseClass inquiry into the 72 RAF mess charities examining the circumstances leading to incidents of fraud and substantial financial loss at RAF Honington Officer’s Mess (registered charity number 1131112) and Sergeant’s Mess (registered charity number 1131113).The commission was concerned that the circumstances which allowed a fraud at RAF Honington to have occurred could be replicated in other mess charities, because they operated to the same financial control and assurance procedures used by the two mess charities at RAF Honington – this is why the class inquiry into all 72 charities was opened.The commission did not take further regulatory action against the charities;the inquiry found that the RAF has taken decisive and appropriate action to address the weaknesses and deficiencies identified as being contributory or casual factors to the fraud.

Charitable trusts

Charity Tax Group has published a briefing by Bates Wells solicitors Lucy Rhodes and Laura Soley, on proposals that all charitable trusts should have to register with a trusts registration service.

Governance

See under Ireland below.

Tax and VAT

Gift aid

Charity Tax Group has convened a working group of charities interested in reviewing the future of Gift Aid, from both a practical and strategic perspective. The working group will complement and inform an existing HMRC-led Gift Aid working group. Interim conclusions are likely to be published by the end of 2019.

Latest figures from HMRC

HMRC has published its annual update of UK charity tax relief statistics, including the reliefs claimed by charities and individuals after a donation. Civil Society Media reports the data shows:

  • the amount of Gift Aid paid out on charitable donations has risen significantly for the first time in three years. The amount of Gift Aid claimed by charities rose to a record £1.35bn, up £90m from the year before, from eligible donations worth £5.41bn.
  • Total tax reliefs for charities, including rates relief and tax repayments, rose to a record high of £3.79bn, up from £3.68bn the year before.
  • after a three-year plateau, the amount raised from the Gift Aid Small Donations Scheme (GASDS) rose from £30m to £40m, although this is still much lower than the £100m a year the relief was originally expected to raise.

Irrecoverable VAT

Civil Society Media reports Charity Tax Group is undertaking a research project on the total VAT burden facing charities, including detailed analysis of the scale of reliefs and the total irrecoverable VAT burden. CTG will be shortly issuing a survey for charities to complete. 

Also see under Culture and Creative below.

General

Secretary of State Rory Stewart has launched a report on the UK’s progress towards the Global Goals (also known as the Sustainable Development Goals or SDGs).

The European Centre for Not for Profit Law has published a short briefing “How do security and counter-terrorism measures impact civil society space?

Brexit

Charity General

The Salvation Army has voiced concerns about funding post-Brexit, reports Civil Society, as the UK Government is yet to consult on the shape of the Shared Prosperity Fund which is due to replace European Social Fund funding post-Brexit.

Civil Society Media have published an article of the effects of Brexit on Community Funding. The article details that the chair of the Association of Charitable Foundations is making a case for using dormant funds to create a Community Wealth Fund.

Health and Social Care

The European Medicine Agency’s management board have provided an update on their preparations to move to Amsterdam, anticipated staff losses and the industries preparations for Brexit.

Immigration

Bates Wells’ Chetal Patel recently wrote an article on the EU settled status scheme which was responded to by the Immigration Minister.

Data protection

Subject access requests

The ICO has published a blog to help support subject access requests (SARs) to the police.  It includes that:

AI

As part of its ongoing Call for Input on developing the ICO framework for auditing AI, the ICO has posted a blogpost “Human bias and discrimination in AI systems”. 

ICO enforcement action

The ICO has fined telecoms company EE Limited £100,000 for sending over 2.5 million direct marketing messages to its customers, without consent.

A former company director found guilty of illegally obtaining people’s personal data and selling it to solicitors chasing personal injury claims, has been fined £1050 for breaches of data protection, disqualified from being a company director for five years and issued with a confiscation order under the Proceeds of Crime Act 2002. 

Fundraising

Safeguarding fundraisers

This Fundraising article suggests fundraisers can be protected from sexual harassment by following policies and procedures intended to protect nurses when carrying out home visits.

Education

Schools

The Department for Education has published statutory guidance on relationships education, relationships and sex education and health education.  The guidance:

  • Is aimed at governing bodies of maintained schools, directors or trustees of academies or free schools, proprietors of independent schools, managers of pupil referral units, teachers, head teachers and local authority staff.
  • Describes the legal duties with which schools must comply when teaching relationships education, relationships and sex education and health education and the content that must be included, however, schools are free to determine how the content is delivered.
  • Sets out the rights of parents and carers to withdraw secondary pupils from sex education delivered as part of statutory relationships and sex education.

The Department for Education has also published non-statutory guidance for school leaders, school staff and governing bodies, to support schools in teaching pupils how to stay safe online.

Schools Minister Lord Agnew has issued an updated handbook to “help bolster the financial management and governance of academy schools”.  See here for the accompanying press release. 

Oasis Charitable Trust, which runs 52 Academies, has been announced as the operator of the country’s first Secure School.

Higher education

See under Charity Commission above.

The Universities Minister has announced that a new group will be created to improve support for students with disabilities in higher education.

The Education Secretary has said universities need to address the ‘stark disparities’ that see students get significantly different earnings and employment outcomes at different institutions despite doing the same subjects.  New data shows the wide variation in average earnings and employability by course and institution 1, 3 and 5 years after graduation. 

The government has published data showing forecasts for student numbers, the cost of student loans and loan repayments in England. The figures reveal that around 45% of the value of student loans being taken out in England will actually be covered by the taxpayer.

Health and social care

Five local councils will be awarded £100,000 a year over a 3-year period. The funding will help them to test and refine their ideas for addressing childhood obesity and health inequalities.

A report published by the Care Quality Commission has found variation in providers’ understanding of the Mental Health Act Code of Practice and how it should be applied. The CQC concludes the MHA Code of Practice is not being used as it was intended due to a lack of awareness and understanding of the statutory guidance amongst providers and staff.

The Care Quality Commission has published a series of case studies highlighting what providers have done to take a flexible approach to staffing.  The case studies show different ways of organising services. They focus on the quality of care, patient safety, and efficiency, rather than just numbers and ratios of staff.

Equality

The Prime Minister has launched a “new drive to tackle barriers faced by disabled people”.  It includes the creation of a new Equalities Hub which will sit alongside the Government Equalities Office and Race Disparity Unit.  Proposed new measures include higher accessibility standards for new housing, an overhaul of statutory sick pay, and greater workplace support.  The team will work closely with disabled people, disabled people’s organisations and charities to develop a new approach to disability.  Further measures will be set out later this year.

Social Finance

Everything and therefore nothing: why we must reject the ‘impact’ investors adding nothing new. The first article in the ‘Impact Papers’ series, by EVPA and Pioneers Post, in which Luciano Balbo, founder of Italy’s first impact fund, considers the language used to define impact investors, in order to avoid repacking existing activities as impactful investment (more information on the Impact Papers series).

Shortage of specialist skills a challenge to growing impact investing market. Pioneers Post comments on some findings of the 9th Annual impact Investor Survey by GIIN (here, for reference), including the need for more professionals with impact measurement and managements skills.

£1.6m still available to support community share movement. Power to Change invites applications for grants to set up community share offers, and subsequent matched-funding. The programme is funded by Power to Change and run by the Community Shares Unit, and is designed to enable people to create community assets such as pubs, social clubs or bookshops.

Garfield Weston Foundation releases report on its Weston Anniversary Fund. The report provides analysis of the applications to the fund, which was oversubscribed, and key learnings. The fund’s purpose was to provide investment in community facilities. Civil Society provides some commentary on the report.

Housing

The Regulator of Social Housing has published a consultation on revising its guidance on intervention, enforcement and use of its powers.

Faith based organisations

The Government has launched a Law Commission review into marriage ceremonies in England and Wales. The two-year project will review the current laws on how and where marriages can take place.  The government says “the Law Commission will now work with a wide variety of groups, including faith leaders and those with experience of conducting marriages, to examine how best to reduce red tape and ensure we have a simpler, fairer system that provides more choice, genuine alternatives to the cost of an approved venue or being restricted to a register office.”

Charities working internationally

See under General above.

Culture and creative

In a case brought by HMRC against the Royal Opera House Covent Garden Foundation, the First Tier Tribunal has agreed the Foundation (which VAT exempts ticket sales) can partially recover input VAT incurred on costs to produce shows because the shows had a clear and direct connection to the VAT taxable income from catering supplies made to the audience.

Ireland

NCVO reports Ireland’s national association of community and voluntary organisations, The Wheel,  has written to stakeholders to notify them that their governance code steering group have decided to retire the Governance Code for Community, Voluntary and Charitable Organisations (CVC Code). Instead, the group have endorsed the new Charities Governance Code for Ireland which was published by the Irish Charities Regulator in 2018. The regulator will expect all charities to start reporting their compliance by 2021.


All content on this page is correct as of July 2, 2019.