Bates Wells Briefing for Charities & Social Enterprises | 26 August

Bates Wells highlights

Charities, Social Enterprise

Crisis Decision Tool

If your organisation is dealing with financial difficulties and you’re not sure what your options are, take a look at our free crisis decision tool. Simply answer a few questions about your organisation’s situation and receive a tailored guide, signposting to info and resources that should help you to decide on next steps. Click here to get started!

Stephen Lloyd Awards

How can we drive societal change in a pandemic? Unlocking ways to transform society’s obstacles is at the heart of Stephen Lloyd Awards. Due to COVID-19 and the difficulties with continuing with the original process, there is now a revised timetable for the postponed 2020 Awards. If you have an innovative solution to transform society, scroll down to learn how to confirm or revise an existing application or to make a new application.

Today’s Briefing is a summer “catch up”.  It covers the period from 3rd to 21st August.

At a glance

Bates Wells and the Chartered Governance Institute (ICSA) have published guidance around the Corporate Insolvency and Governance Act 2020 as it applies to charities, social enterprises and mutuals. 

A Sikh charity has successfully challenged the appointment of an Interim Manager by the Charity Commission. 

The Fundraising Regulator has published a blog about fundraising during the pandemic, flagging five key issues.

The Information Commissioner’s Office has updated its guidance on collecting customer data for contact tracing to incorporate the new rules introduced in Scotland and Wales.

Coronavirus – sector general

Pro Bono Economics has published “Weathering the storm: PBE Covid Charity Tracker”, the results of a recent survey completed by 455 charities.  

IVAR has published this ninth briefing which shares the experiences of 36 leaders participating in online peer support sessions between 14th and 31st July, and reflections on the questions and opportunities for funders that they raise.

Coronavirus – government and other funding

The criteria have been announced for the £270m repayable finance scheme to aid cultural organisations’ recovery from coronavirus impact. Key points include:

  • Applicants will be assessed against cultural and economic criteria set out in Arts Council England guidance.  Organisations will also need to demonstrate national or international significance and opportunities to engage their local communities through education and outreach.
  • Organisations will be able to apply for funding in excess of £3 million on loan terms including a payment term of up to 20 years, an initial repayment holiday of up to four years and a 2% interest rate per annum.
  • Arts Council England will review applications, with input from other arm’s length bodies including the British Film Institute, Historic England and National Lottery Heritage Fund. Decisions will be taken by the independent Culture Recovery Board, chaired by Sir Damon Buffini.

Further detail has also been published on the Culture Recovery Fund’s £120m capital investment. And Historic England will be delivering the £50 million Heritage Stimulus Fund to restart construction and maintenance on heritage sites.

The £100m Zoo Animals Fund is now open for applications.  The new fund will provide funding for zoos and aquariums which need additional support in caring for their animals following a drop in income caused by the coronavirus pandemic.

Social Investment Business and Access – the Foundation for Social Investment – have announced that £4m worth of grant funding has been made available to be used alongside the Resilience and Recovery Loan Fund to support charities and social enterprises based in and delivering the majority of their impact in England.  This is a part of the wider £30m Access has received from dormant bank accounts to create new blended finance solutions for charities and social enterprises in England impacted by the COVID-19 crisis.

The National Emergencies Trust has announced plans to distribute a further £12m from its coronavirus appeal to a range of charity partnerships offering targeted support to groups who have been disproportionately affected by the pandemic.

Civil Society reports that the National Lottery Community Fund has launched a £4.95m fund to help charities scale up their digital capabilities – it’s aimed at charities working with groups that have been disproportionately affected by the pandemic.

Coronavirus – contact tracing

The Information Commissioner’s Office (ICO) has updated its guidance on collecting customer data for contact tracing to incorporate the new rules introduced in Scotland and Wales.

The ICO has also published a statement which acknowledges the importance of contact tracing to the fight against COVID-19 and welcomes the development of an effective app to support this.

Coronavirus – redundancies

NPC is collating publicly available information about charity redundancies – including consultations on redundancies. See here for a timeline and graph.  

Corporate Insolvency and Governance Act 2020

CGI guidance

In conjunction with The Chartered Governance Institute (ICSA), we have published guidance around the Corporate Insolvency and Governance Act 2020 as it applies to charities, social enterprises and mutuals. 

Simon Steeden, Charity and Social Enterprise Partner at Bates Wells comments “There are a number of measures brought in by the Act that could provide some help to charities, social enterprises and mutuals in these very difficult times.”

CIO regulations

New CIO insolvency regulations came into force on 13th August 2020.  The Charitable Incorporated Organisations (Insolvency and Dissolution) (Amendment) (No.2) Regulations 2020 (SI 2020/856) amend the 2012 Charitable Incorporated Organisations (Insolvency and Dissolution) Regulations (SI 2012/3013) in order to make the correct provision to ensure that the moratorium under Part A1 of the Insolvency Act 1986 applies effectively to CIOs.

Implications for landlords and tenants

Our Real Estate team have considered the implications of the Act for landlord and tenant relationships.  See here for their thoughts.

Charity Commission

New inquiry

The Charity Commission has opened a statutory inquiry into the Birmingham Education Trust, a charity which funds and operates a school in Birmingham.

Inquiry report

Name of organisationBrief descriptionAnything unusual e.g. unusual facts or novel/rare use of commission’s powers
Lantern of Knowledge Educational Trust (1111331)
Inquiry report
CC press release
The commission opened its inquiry after a former Islamic Studies teacher was charged with disseminating terrorist material to children at a secondary school run by the charity. The commission was also concerned about a decline in the school’s performance against the independent school standards.
The report acknowledges improvements in the charity’s governance and safeguarding procedures since the commission’s intervention.
The commission directed the trustees, by order, to take specified actions, including complying with the independent school standards, and undertaking a review of its governing document.The commission also issued an official warning during the course of the inquiry, three of the four current trustees. Modifications were made to the official warning following the issuing of notice of the warning, because the trustees challenged it via the commission’s decision review process, but it was still issued to the charity’s trustees in respect of their failure to adhere to the independent school standards.By virtue of the teacher’s conviction he is automatically disqualified for life from serving as a trustee or senior manager of any charity in England and Wales, meaning the inquiry did not need to consider disqualification.

Charity law cases

The decision by the Charity Commission to appoint an Interim Manager at the Sikh Channel has been quashed by the First Tier Tribunal.  We think this may be the first successful challenge to an Interim Manager appointment.  


Charity Governance Code

The Code Steering Group has published a summary of responses to the recent consultation.  Civil Society Media reports 85% of respondents agreed with the proposal to “refresh” the code.  One focus of the refresh will be expanding its section on diversity. Civil Society Media quotes Rosie Chapman, chair of the steering group, saying there is “wide support to broaden the Diversity Principle to address aspects of inclusion and equality. Both of these areas will be addressed when the report is published later this year.” The refreshed code will be published later this year, with a more detailed review and update of the code taking place in 2023.

NPC survey

NPC has partnered with decision-making consultancy Leapwise on a pro bono project focusing on how boards can equip themselves for a challenging period of decision-making by developing their approaches and capabilities. The project will draw on the collective experience of the sector, the experience of Leapwise and NPC, and evidence from decision-science. NPC is inviting executive and non-executive members of charity boards to complete this short three minute survey on their experiences with board meetings and decision-making. The survey results will enhance understanding of charity governance and how it has been affected by the pandemic.

Risk management

In partnership with Zurich, NCVO is running a series of risk management webinars for charities. The sessions will cover safeguarding, data security and organisational resilience. Learn more here.

Tax and VAT

Changes to VAT and digital advertising

HMRC has recently clarified its position on the VAT treatment of certain types of digital advertising. See here for a Briefing from Bates Well’s Bill Lewis and Susah Shi.

Clarifications from HMRC on the VAT treatment of humanitarian and associated funding

HMRC has recently set out some clarifications to its existing guidance on the VAT treatment of humanitarian and associated funding, in the course of its correspondence with the Charity Tax Group. The clarifications have not yet been incorporated into the published guidance, but HMRC has indicated that it will be updated, with the correspondence being published in the meantime.

For funding received from governmental organisations, where DfID (or other government department) is funding the carrying out of the overseas aid programme of the UK (i.e. fulfilling the UK’s international aid obligations), then HMRC consider that there is no taxable supply of services by the charity which is undertaking the overseas work for DfID, because DfID does not receive any benefit that would make it a taxable supply. Such activity is not business activity and is outside the scope of UK VAT. In certain cases, known as “special arrangements”, DfID may make payments to UK charities on behalf of overseas governments outside the EU, for work which is done overseas. Here, HMRC have clarified that where there is a supply by the charity, the supply takes place overseas (i.e. an export of services) and the charity does not need to charge any VAT, but it can still reclaim the input VAT costs which it incurred when providing those services.

For funding received under a “back-to-back” contract, where the main contractor who receives the UK governmental funding creates a sub-contract with a charity (and the money is simply passed through from the governmental department to the sub-contractor), the same VAT position as above will apply, as long as the main contract was clearly for the delivery of the UK’s international aid programme on the ground. Examples of such contracts would be contracts between a humanitarian aid charity and a main contractor of the UK government department, or between a charity which is the main contractor and its own sister charity in the UK. HMRC takes the view that such funding is just a pass-through of monies, with no supply between any of the parties.

This is a welcome clarification of the existing guidance, and we look forward to a formal update of the guidance in due course. The full correspondence is available here.

Sector – equality and diversity

NCVO’s equity, diversity and inclusion work

This month NCVO released a series of blogs that shared its thoughts and reflections on its equity, diversity and inclusion (EDI) phase one work. Below you can find blogs from various NCVO contributors:

The Charity Retail Association has committed to addressing racism in the charity retail sector.

Data protection

Age Appropriate Design Code

The Information Commissioner’s Office has published a statement issuing the Age Appropriate Design Code. The statement confirms that the Code will come into force on 2 September 2020. The Code will then have a transition period of 12 months to allow online service providers time to ensure that they will be compliant.

Exam results

The Information Commissioner’s Office (ICO) has issued:

  • statement in response to exam results. This notes that the ICO has been engaging with Ofqual to understand how it has dealt with the exceptional circumstances posed by the COVID-19 pandemic. Ofqual has stated that automated decision-making does not take place in the standardisation model and that teachers and exam board officers are involved in decisions. The ICO advises that any concerns should be raised first with exam boards and then reported to the ICO if the individual is not satisfied.
  • Guidance for teachers and schools on students’ access to information about exam results. This explains that the exam script exemption still applies this year (preventing students from accessing their mock exam scripts and assignments) but does not exempt schools from providing the teacher assessments and rank orders to students. For small cohorts, schools should consider the issue of revealing information about other students.
  • Guidance for students on accessing information about exam results. This is similar to the guidance for teachers and schools and explains that students have the right to request information about themselves but that some information may be exempt.


Fundraising Regulator

The FR has published a blog about fundraising during the pandemic flagging these issues:

  • Keeping the public, staff and volunteers safe;
  • Planning behind the scenes and improving their approach to fundraising;
  • Being respectful;
  • Being transparent and responsive; and
  • Using Personal Protective Equipment (PPE).

The FR has also produced a webinar to help understand what the code is, who it applies to, what the code covers and how to use the code, both online and offline.

Society lotteries

On 29 July 2020, changes to the rules for society lotteries licensed by the Gambling Commission came into effect.  See our Briefing here for more details. 

Post lockdown fundraising

Civil Society Media reports some charities that have resumed face-to-face fundraising activities after lockdown have said they are seeing positive early results.

Grant funding

A report from the Association of Charitable Foundations “Funding Practices: The Pillars of Stronger Foundation Practice

argues that foundations should be aware of the power they hold over their grantees and work to minimise it.


See under Data protection above.

An unintended consequence of the government’s U-turn on A level grades is that many university courses are now oversubscribed. Universities make more offers to students than there are places available, as a percentage of students would not gain their predicted grades and therefore not gain their place on the course. The government has announced that it and the higher education sector have together agreed that all students who achieved the required grades will be offered a place at their first choice university. To support this commitment, the Government has lifted the cap on domestic medicine, dentistry, veterinary science and undergraduate teacher training places. Additional teaching grant funding will also be provided to increase capacity in medical, nursing, STEM and other high-cost subjects which are vital to the country’s social needs and economy.

The Department for Education has:

  • Produced an addendum to its guidance ‘School attendance: guidance for schools’ in which it sets out attendance recording guidance for the new school year in light of COVID-19. A new category of non-attendance for circumstances related to COVID-19 has been added to the regulations;
  • Announced a £40m funding package for dedicated school and college transport to get students to school once the new school year begins. The funding is designed to create extra capacity on school transport and allow students to use alternatives to public transport; and
  • Announced that £560m of funding will be available for 580 building projects to improve school buildings.

HMRC has announced that working parents or carers who are eligible for Tax-Free Childcare or 30 hours free childcare but have temporarily fallen below the minimum income requirement as a result of the pandemic will continue to receive financial support until 31 October 2020.

The High Court has found in Shaw and another v Secretary of State for Education [2020] EWHC 2216 (Admin) that the government had not unlawfully laid a statutory instrument before Parliament on the day before it came into force and had not acted unlawfully in not preceding it with a formal consultation. Responding to pressure on local authorities and health bodies due to COVID-19 pandemic and the closure of schools, regulations were passed to relax requirements to prepare EHC assessments. Kerr J held that there was no duty to consult the families of children with SEND or representative organisations. Their views had not, in any event, been “shut out”. Urgency meant that an informal process of “making calls, sending emails, gathering evidence, receiving representations and deciding how to act”, including with the Children’s Commissioner and the Association of Directors of Children’s Services, was rational and fair.


People needing additional follow-on care after being discharged from hospital are to be supported by a £588m fund to cover adult social care or the immediate costs of care in their own home.

The Department of Health and Social Care, NHS England and Improvement, and Public Health England are inviting applications from voluntary, community and social enterprise (VCSE) organisations to join the VCSE Health and Wellbeing Alliance. The closing date for applications is midday on 6 November 2020.

The National Academy for Social Prescribing (NASP) has been awarded £5m in funding to support people to stay connected and maintain their health and wellbeing following the COVID-19 pandemic.


The government is consulting on a new regime for ‘digital imprints’ i.e. a requirement for digital election material to explicitly show who is promoting it and on whose behalf.  Imprints are already required for printed election material.


The Government recently published a series of planning-related documents, including a White Paper on the Future of Planning and a consultation. Proposals include plans to replace the Community Infrastructure Levy with a consolidated Infrastructure Levy, with current exemptions potentially under review.  Currently, charitable relief is mandatory where a charity owns a material interest and the development is to be used wholly or mainly for its charitable purpose, or of that charity and another charity (or charities).


OSCR’s Policy and Research Engagement Manager Louise Meikleham has posted this blog in response to OSCR’s survey of the impact of COVID-19 on Scottish charities.

OSCR’s next virtual “Meet the Regulator” event will take place on 15 September at 10:00am.

OSCR has published its newsletter for August, containing a round-up of its recent news stories.

Stephen Lloyd Awards

In the wake of COVID-19, we find ourselves living in a new world facing new challenges. Endeavouring to meet social need by supporting systemic change-makers, the Stephen Lloyd Awards are briefly reopening its 2020 application process.  Innovative start-up charities, social enterprises, founders and thinkers who are making positive societal changes with their solutions are invited to apply. Applications close on a revised timetable of midnight on 16 September. An initiative of the Bates Wells Foundation, the Awards supports innovations and provides the vital encouragement needed to cultivate their ideas and spread their impact. Winners receive funding of up to £20,000, along with an opportunity to receive valuable pro bono support from experts in the charity and social enterprise sector. For full details on the application process and how to apply, please visit or email Mona Rahman at [email protected].

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 August 26, 2020.