As the coronavirus situation continues to evolve, all of us at Bates Wells are making sure we keep you as up-to-speed as possible with the latest legal developments through our Coronavirus Hub. Here you can read our thinking on how the coronavirus could affect you, your organisation or your employees.
At a glance
The government has published a Q&A document clarifying proposed measures in relation to company AGMs and other general meetings during the COVID-19 outbreak.
HMRC has agreed some relaxations relating to the retail gift aid scheme, and donations in lieu of membership subscriptions.
The Information Commissioner’s Office has published a document setting out its regulatory approach during the coronavirus pandemic.
Guidance for charity auditors and independent examiners on reporting “matters of material significance” has been updated to reflect reporting at times of national emergency.
The commission has published new fraud guidance. Bates Well’s Mindy Jhittay comments “For all of us, the coronavirus (COVID-19) pandemic has been a time of dramatic, unprecedented change to the way we live and work. Sadly, the more things change, the more some things stay the same – fraudsters are using the pandemic as an opportunity to use their old scams in a new world. These include “good cause” donation scams, employment scams targeting people newly in need to work, and impersonation fraud designed to get you to transfer money or provide your card details to a fraudster. For practical guidance on how to spot – and stop – coronavirus related fraud, see this Bates Wells checklist.
NCVO has published “Five principles for organisations to ensure an inclusive response to coronavirus”.
The Chief Executive of ACEVO, Vicky Browning, has published these notes from a DCMS meeting last Thursday (16 April) – they give an update on some grey areas surrounding the government’s financial support for charities:
- National Lottery Community Foundation hopes to be able to share its criteria for applications for funding this week ie the week beginning 20th April. The NLCF has two pots of funding – £300m of its own money which has been brought forward, plus the £370m from the Exchequer. It is anticipated that the government funding will go towards applicants needing cash for emergency response plus a little bit of recovery funding, whereas the NLCF grants will be for organisations needing recovery funding plus a little bit of emergency response cash.
- The £360m to come from other government departments includes a one-off (not quarterly) sum of £200m for hospices, ie there is £160m remaining. Departments have been asked by DCMS what services they want the voluntary sector to deliver and an idea of who they wanted to work with. The deadline for the departments to submit their requests is 17 April. Different departments are operating differently around how they reach their decision, but there is no formalised bidding process for this funding. The ratification process for who will get what will happen over the next week.
- DCMS has raised the issue of the challenges of the Job Retention Scheme for charities with Treasury (ie can an adjustment be made for charities to be able to deploy furloughed staff into the emergency response without losing furlough payments). We were told there is no movement on this from Treasury.
Other sources of funding
Civil Society Media reports that, according to an analysis of public statements, UK corporates have pledged at least £165m to charities responding to coronavirus. This figure includes the £100m Barclays foundation previously reported in our Briefings.
Donations in lieu of membership subscriptions
Charity Tax Group reports HMRC officials have provided the following update in respect of Gift Aid on donations freely given to charities and CASCs while membership subscriptions have been suspended:
- “We are aware that many Community Amateur Sports Clubs (CASCs) and charities have suspended the collection of membership subscriptions in light of the Covid-19 pandemic but some individuals are making voluntary donations instead in order to support their club.
- “It is probably worthwhile reminding you that that there is no barrier to Gift Aid being claimed on such donations, provided they are freely given, no benefits arise in consequence of that specific donation (either now or in the future) or, if provided, they fall within the legislative limits, and a Gift Aid Declaration is obtained.
- “In circumstances where clubs have reduced their subscription rate, any amounts freely donated over and above this reduced amount would also potentially be eligible for Gift Aid. In all cases it must made clear to the members that the amounts voluntarily given by them are not subscriptions, carry no subscription rights and will be treated as donations on which the CASC or charity will claim Gift Aid.
- “The personal tax implications of making a Gift Aid donation will also need to be explained to donors.”
Retail Gift Aid
Charity Tax Group has also shared some practical relaxations to the operation of Retail Gift Aid agreed by HMRC while offices are closed during COVID-19. They relate to oral declarations and returned mail. CTG is asking HMRC if the relaxation relating to oral declarations can be extended to other Gift Aid.
Converting ticket refunds for cancelled events into Gift Aid donations
HMRC has issued guidance to help charities process ticket refunds, collect donations and reclaim Gift Aid for cancelled charity events. If a charity event is cancelled due to COVID-19, HMRC will accept that, where a person due a refund decides to donate this to a charity, the Gift Aid requirements are met provided the individual donor:
- Does not receive a benefit as a result of their donation.
- Agrees that the cost of their ticket becomes a donation.
- Completes a Gift Aid declaration.
The charity must also keep an audit trail, including a copy of the agreement from the donor designating the ticket cost as a donation. This will avoid the need to physically refund the ticket price for the individual to re-donate. This facility is not available for postponed events.
The ICO has published a document setting out its regulatory approach during the coronavirus pandemic. The document sets out the flexibility the law gives the ICO to be a “pragmatic and empathetic regulator”. It includes that the ICO will continue to act proportionately, recognising that the current reduction in organisations’ resources could impact their ability to comply with aspects of data protection law. For example, although organisations should report personal data breaches within 72 hours, the ICO will take a proportionate approach if this crisis impacts their ability to do so. The ICO has stood down all audit work. Before issuing fines, the ICO takes into account the economic impact and affordability, which in these circumstances may mean the level of fines reduces. The reduction in organisations’ resources could impact their ability to respond to subject access requests and the ICO will take this into account when considering formal enforcement action. The reduction in resources could impact organisations’ ability to comply with aspects of freedom of information (FOI) law, such as how quickly they can answer FOI requests, but appropriate measures should still be taken to record decision making.
The ICO has also published two blogs:
- “Combatting COVID-19 through data: some considerations for privacy”
- “Video conferencing: what to watch out for”
See under Tax above.
Published last week, Peter Lewis, Chief Executive of the Chartered Institute of Fundraising, takes a look at the state of UK fundraising in the setting of the coronavirus pandemic, following the Easter Bank holiday weekend.
The Department of Education has announced:
- Disadvantaged children across England are set to receive laptops and tablets as part of a push to make remote education accessible for pupils staying at home during the coronavirus outbreak. Devices will be ordered for children in the most vital stages of their education, those who receive support from a social worker and care leavers.
- The government will also provide 4G routers to make sure disadvantaged secondary school pupils and care leavers can access the internet – where those families do not already have mobile or broadband internet in the household.
- The Oak National Academy is due to launch on Monday 20 April. This brand-new enterprise has been created by 40 teachers from some of the leading schools across England, backed by government grant funding. It will provide 180 video lessons each week, across a broad range of subjects from maths to art to languages, for every year group from Reception through to Year 10.
The Department for Education (DfE) has published updated guidance for schools in England about setting up or reviewing complaints procedures in relation to the COVID-19 pandemic. The guidance confirms that the DfE does not expect schools to handle new or existing complaints while they are closed as a result of COVID-19, but complaints can be considered when the government states that schools re-open. Schools should, however, continue to engage with parents and pupils where they can.
See here for news and communications from the Department for Education relating to governance in maintained schools and academy trusts in England.
Health and social care
The government has published an action plan to support the adult social care sector in England throughout the coronavirus outbreak.
How to vet your investors – and why you must. Alex Evangelides, investment director for FINCA Ventures, writes for Pioneers Post highlighting questions for investees to ask of investors during their due diligence. She argues that a perceived power imbalance between investees and investors is arbitrary, as investors need investees just as much as the other way around.
Councils across England are to receive another £1.6 billion in additional funding as they continue to respond to the coronavirus pandemic.
Councils will also be allowed to defer £2.6 billion in business rates payments to central government, and £850 million in social care grants will be paid up front this month.
Company law relaxations
The Department for Business, Energy and Industrial Strategy and the Financial Reporting Council have published a Q&A document concerning measures in respect of company filings, AGMs and other general meetings during the COVID-19 outbreak. The Q&As aim to provide companies with additional information following on from the government’s announcement in March that it will be introducing legislation to alleviate difficulties in meeting statutory obligations to hold shareholder meetings and file documentation with Companies House during the pandemic. The matters addressed by the Q&As include:
- The form that the planned flexibility on AGMs and other general meetings will take. The Q&As state that while the detail is still being finalised, it is envisaged that companies will be given the ability to hold “closed” meetings with a minimum number of people by way of telephone or other equivalent means of communication. In some cases, companies will have the ability to override their Articles for a short period.
- Whether the deadline for holding AGMs will be extended. The Q&As state that while it is anticipated that the option to delay will be provided, it is expected that most companies will wish to hold meetings within normal timeframes, to ensure any necessary business is transacted in a timely fashion.
The Q&As reiterate the government’s intention to bring forward legislation to implement the anticipated flexibilities as soon as possible, but refer companies whose AGMs are imminent to the guidance published by the Chartered Governance Institute (ICSA). The Q&As indicate that companies’ ability to meet other filing deadlines is being monitored and action will be taken to provide breathing space if necessary.
Companies House has announced that, in response to the coronavirus (COVID-19) outbreak, it will ease its strike-off activities and treat late filing penalty appeals “sympathetically”. Further extensions to filing deadlines will also be provided if needed. The announcement is here and more detailed guidance is here.
Accounting and audit: reporting matters of material significance to the UK charity regulators
This guidance, which is produced by the commission, OSCR and CCNI, has been updated to give “further examples and clarity on matters to report, particularly with respect to modified opinions. The COVID-19 situation has also been reflected to advise on reporting at times of national emergency.”
We understand the unprecedented issues currently facing the charity and social enterprise sector and firmly believe that there has never been a more important time for us to help one another.
If it would help you to discuss any charity or social enterprise related concerns that you may have, please complete the form in the link below to set up a free 30 minute consultation with one of the team.
We’ll get back to you to arrange a time to talk. If you are an existing Bates Wells client, please get in touch directly with your normal contact.
Charity Governance Health Check
The Charity Governance Code is recognised by the Charity Commission as the standard for effective charity governance. Charities are expected to apply, or explain reasons for not applying, the Code. If your charity is coming up to the time that you need to review your performance, you might be wondering about how to navigate the wide range of guidance issued by the Charity Commission. Find out how we could help you here.
Disclaimer – The information contained in this update is not intended to be a comprehensive update – it is our selection of the website announcements which we think will be of interest to charities and social enterprises. The content is necessarily of a general nature – specific advice should always be sought for specific situations.
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 April 21, 2020.