Bates Wells Briefing for Charities & Social Enterprises | 7 July

Bates Wells highlights

Charities, Social Enterprise

Corporate Insolvency and Governance Act 2020

We have prepared this detailed Briefing on the main changes introduced by the Act.  We have also updated our guidance here on holding members’ meetings while lockdown restrictions are in place.  

Charity governance health check

Charities are required to take account of a wide range of guidance issued by the Charity Commission and other regulators in relation to different aspects of their activities. We can help guide you through self-assessment of your current arrangements and provide a road map towards best practice. Click here to find out more.

At a glance

The government has announced a £1.57 billion “investment to protect Britain’s cultural, arts and heritage institutions”.

The government has also announced a £40 million Green Recovery Challenge Fund which will create jobs in nature recovery and conservation.

The ICO has issued guidance for “Contact tracing – protecting customer and visitor details”.   

The Charity Commission for Norther Ireland has issued a further update about its operations following the Court of Appeal judgment that all decisions must be made by the Board of Commissioners or a committee to include Commissioners with delegated authority, rather than commission staff.

Coronavirus – government funding for arts/culture

On Sunday 5 July, the government announced a £1.57bn “investment to protect Britain’s cultural, arts and heritage institutions”. Organisations across a range of sectors including the performing arts and theatres, heritage, historic palaces, museums, galleries, live music and independent cinema will be able to access emergency grants and loans.  The package includes:

  • £1.15bn support pot for cultural organisations in England delivered through a mix of grants and loans. This will be made up of £270m of repayable finance and £880 million grants.
  • £100m of targeted support for the national cultural institutions in England and the English Heritage Trust.
  • £120m capital investment to restart construction on cultural infrastructure and for heritage construction projects in England which was paused due to the coronavirus pandemic.

The new funding will also mean an extra £188m for the devolved administrations in Northern Ireland (£33m), Scotland (£97m) and Wales (£59m).

Decisions on awards will be made working alongside expert independent figures from the sector including the Arts Council England and other specialist bodies such as Historic England, National Lottery Heritage Fund and the British Film Institute.

For those involved in the arts sector, the National Lottery Project Grants fund will be open for applications on 22 July, with a budget of £59.8m available until April 2021.

Coronavirus – other government funding

The government has also announced:

  • a £40m Green Recovery Challenge Fund which will create jobs in nature recovery and conservation;
  • £6m of extra funding to support serving personnel, veterans and their families during the coronavirus pandemic; and
  • the £10m Kick-starting Tourism Package, which will give small businesses in tourist destinations grants of up to £5,000 to help them adapt their businesses following the coronavirus pandemic.

Nearly £8.5m allocated so far from government’s small charity coronavirus fund. Civil Society Media reports that just shy of £8.5m has been allocated to small charities from the government’s coronavirus emergency fund in the six weeks after the £200m scheme opened. For more, Third Sector reports that it understands that just £2m of the funding has actually been provided to recipients.

Coronavirus – other sources of funding

Comic Relief has delivered a £3.4m fund for BAME-led projects worst hit by COVID-19, which is intended to help hundreds of small grass roots charitable projects across the UK.

The Steve Morgan Foundation has extended its COVID-19 Emergency Fund for a further 3 months, until the end of September. According to the press release, the campaign has handed out over 450 awards across  Merseyside, North Wales and Cheshire, totalling more than £4.5m, and businessman Steve Morgan has committed to give up to another £1m in match-funding to Cheshire Community Foundation’s COVID-19 Response Fund.

COVID-19: Social impact funding you might miss – 2 July update. Pioneers Post provides a round-up of emergency grants, loans and other funding sources where deadlines are approaching or that might otherwise be missed.

Coronavirus – contact tracing

The ICO has issued guidance for “Contact tracing – protecting customer and visitor details”.  

Coronavirus and contracts

The government has updated its “Guidance on responsible contractual behaviour in the performance and enforcement of contracts impacted by the COVID-19 emergency”. Three specific issues are considered further in this guidance: payment, extensions of time and the avoidance and resolution of disputes.

Corporate Insolvency and Governance Act 2020

We have prepared this detailed Briefing on the main changes introduced by the Act.  We have also updated our guidance here on holding members’ meetings while lockdown restrictions are in place. 

Various company filing deadlines have been extended – for more information see Government guidance here and here.

Charity Commission

Inquiry reports

Name of organisationBrief description
Double defaulter class inquiry
126 charities
Inquiry report
In September 2013, the commission opened a statutory class inquiry into charities that were in default of their statutory obligations to meet reporting requirements by failing to file their annual documents for two or more years in the last five years and met certain criteria.During the period April 2019 – March 2020:·     77 charities submitted their outstanding annual documents and continue to operate as charities.·       26 charities were found to have ceased to exist or do not operate and were therefore removed from the register of charities·       5 charities under the class inquiry were referred to a separate inquiry during the reporting period

Dormant trusts

The commission and DCMS have jointly announced future funding until 2021 for a programme that takes funds lying dormant in the accounts of inactive or ineffective charities and puts them to good use.

Regulating in the public interest

The commission has added two supplementary reports to its recent report “Regulating in the Public Interest” setting out the research approach and findings in more detail.

Tax and VAT

HMRC v Wellcome Trust (25 June 2020)

As background, the Wellcome Trust is a charity with a significant investment portfolio. Some of that portfolio related to non-EU investments, and the Wellcome Trust obtains investment management services from suppliers established outside the EU to manage those investments.

The issue in this case was whether the Wellcome Trust was a taxable person “acting as such”, when it purchased those investment management services. Under Article 44 of the VAT Directive, the place of supply of services made to a taxable person “acting as such” will be the place where that person has established his business (in the case the UK). In addition, if the services are supplied by a taxable person not established in the UK, then the reverse charge rules will apply and the customer (i.e. Wellcome Trust) will need to account for the VAT to HMRC. However, if the Wellcome Trust were not a taxable person “acting as such”, then place of supply would be where the investment manager is established (i.e. outside the EU), and thus there would be no UK VAT charged.

The court found that the words of Article 44 needed to be interpreted in context, and that in particular they needed to be read together with Article 43. When read together, the effect of Article 43 and 44 was that services supplied to a taxable person are deemed to be supplied where the recipient of those services is established (except for services which are received for the recipient’s own personal use). The term “acting as such” in Article 44 does not exclude taxable persons who receive services for non-economic business activities (i.e. the Wellcome Trust).

The Wellcome Trust was therefore a taxable person “acting as such” when it purchased the investment management services from outside the EU. The place of supply of those services is therefore the UK, and UK VAT will apply.

Case: HMRC v Wellcome Trust Ltd (Case C-459/19) EU:C:2020:496 (25 June 2020) (Advocate General Hogan).

Children’s services

150+ organisations are calling on the Government to put children at the heart of the recovery process.


The Department for Education has:

  • Announced that Ofsted will visit schools beginning at the start of the next academic year, but will not yet be inspecting. The visits will not be graded, but are designed to reassure parents, ministers and the public about how schools and colleges are managing the return to full education of their pupils and students;
  • Announced a new initiative that will see schools benefit from a £320m PE and Sport Premium;
  • Released a letter from the Gavin Williamson to Ofqual’s Chief Regulator, Sally Collier, setting out the Department’s broad policy objectives in relation to exams and assessments in the 2020/21 academic year – that being that exams should go ahead; and
  • Announced that it is intended that nurseries, schools and colleges will reopen in full in September, lifting current restrictions on group sizes. The announcement outlines high-level guidance about what will happen should there be a COVID outbreak in a school, which would involve small groups self-isolating.

The Student Loans Company (SLC) has launched its student finance application service for postgraduate doctoral students in England. Eligible students can apply for a Postgraduate Doctoral Loan to help them with tuition fees and living costs while they study courses such as PhDs.

Social finance and impact investing

Getting out of debt: Solving the equity equation for social innovation. Duncan Brown, Commercial Director for Shift, writes for Pioneers Post in follow-up to Shift’s recent study with the Esmee Fairbairn Foundation, to outline the current state of the market in relation to patient, risk bearing (equity and ‘equity-like’) capital for social ventures.  

There have been some Changes at The Big Society Trust, renamed the “The Oversight Trust – Assets for the Common Good”, which now oversees the Access foundation, Fair4All Finance and Youth Futures Foundation, and which has appointed Sir Stuart Etherington, former CEO of NCVO, to as chair.

Charities need an innovation fund worth at least £50m, says Barnardo’s boss. Civil Society Media summarises its interview with Javed Khan, chief executive of Barnardo’s, who is calling for an innovation fund for charities, which he argues have nothing like the scale of private investment going into innovation in other sectors.

Black Lives Still Matter: Our Ongoing and New Internal Initiatives. Diversity Coordinator for Social Innovation Business (“SIB”), Ebru Buyukgul, shares news of SIB’s ongoing and new internal initiatives and reiterates SIB’s commitment to equality, diversity, and inclusion.

Just do something! How impact investors can move past silence and tokenism on racial injustice. Amir Rizwan, co-chair of the UK’s Diversity Forum, writes for Pioneers Post about the slow speed of the social investment sector to lend its weight to the issue of racial inequality.


The Chancery Lane Project (TCLP) has published the second edition of its Climate Contract Playbook and a Glossary of key climate terms. The second edition of the Playbook contains 13 new precedents that can be added to a variety of commercial, finance, corporate, employment and property documents to take account of climate risks.

Elections and campaigning

The Minister of State at the Cabinet Office has replied to Lord Evans’ letter to the Prime Minister regarding the CSPL review of electoral regulation.

See this NCVO blog “What do civil service reforms mean for charity influencing?”


The Office of the Scottish Charity Regulator (OSCR) is looking to set up a Charities Reference Group to engage and interact directly with OSCR, including acting as a sounding board for OSCR to ensure that it plays an effective role in supporting the sector and underpinning public trust and confidence in charities. The aim is to develop a representative group that reflects the range of charities across Scotland, taking into account size of organisation, geographical area, beneficiary groups, type of activity etc.

Northern Ireland

The Charity Commission for Northern Ireland (CCNI) has issued a further update about its operations following the Court of Appeal decision in McKee & others v. Charity Commission for Northern Ireland.

The Court of Appeal held that all commission orders and decisions must be made by the Board of Commissioners or a committee to include Commissioners with delegated authority, rather than commission staff following manuals approved by Commissioners.  One practical knock-on is that for any charities registered with CCNI prior to the end of May 2019, their registration is “considered to be void at this time”. CCNI says this is likely to affect over 6000 charities but the fact that they are a charity in law is not altered by their temporarily not being a registered charity.

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 July 7, 2020.