Bates Wells Briefing for Charities & Social Enterprises

The refreshed Charity Governance Code has been published this week.  See here for our analysis of the key changes.

Social Enterprise
Bates Wells highlights

In a new blog “A bumpy road ahead for international data transfers” Bates Wells’ Victoria Hordern and Michael Charalambous examine the implications of new European recommendations for organisations transferring data outside the EU.

At a glance

Charity Tax Group has published a new report showing that VAT continues to place a significant burden on UK charities, with irrecoverable VAT now costing charities £1.8bn a year. 

The House of Lords Library has published an article on the Draft State Aid (Revocations and Amendments) (EU Exit) Regulations 2020.

The Government has confirmed plans to repeal the Fixed-term Parliaments Act.   

Coronavirus – regulations 

​Last week the government made the Health Protection (Coronavirus, Restrictions) (All Tiers) (England) Regulations 2020 (SI 2020/1374) and published an explanatory memorandum. They implement the three-tiered approach to COVID-19 restrictions across England and, consistent with previous restrictions, the Regulations include exceptions from limits across all three tiers for gatherings that are reasonably necessary for work or providing voluntary or charitable services (see Exception 4). They also:

  • Provide an exception from the business and premises closure rules across all three tiers where they are used for essential voluntary services or urgent public support services.
  • Allow “permitted organised gatherings” to take place across all three tiers in venues (other than private dwellings) operated by charities and, where organised by charities, in public outdoor places.

The organiser must take the “required precautions” in relation to that gathering. These include carrying out a risk assessment and taking all reasonable measures to limit the risk of the transmission of COVID-19. Limits on numbers of attendees apply, as set out in government guidance.

The Regulations expire at the end of 2 February 2021. Across all tiers, the rules on wearing face coverings in indoor public settings and social distancing should be followed. The government has published general guidance on the different tiers and specific ones for each tier, see Local restriction tiers: what you need to know, Tier 1: Medium Alert, Tier 2: High Alert and Tier 3: Very High Alert.

Coronavirus – funding

A new £16 million government grant, delivered across England through charity FareShare, will allow thousands of local charities across England to distribute food to people struggling as a result of the pandemic.
A new £1m Resilience Fund for projects in London has been launched.  It aims to support London’s businesses and community groups to emerge stronger from the current coronavirus crisis. 

Coronavirus – company law

The Financial Reporting Council has published updated and consolidated guidance for auditors and companies in relation to Covid-19.  The guidance for companies includes new wording on risk management and internal controls (highlighting the risk of fraud), the strategic report, and interim reports and going concern assessments.  The guidance for auditors notes that there may be some practical difficulties in preparing accounts and carrying out audits, but states that audits must still comply fully with required standards and that companies must give auditors sufficient time to carry out their work.

Charity Commission

Safer giving
The Charity Commission, Action Fraud and the Fundraising Regulator have issued a joint press release warning the public to remain vigilant when making charitable donations this Christmas.

Tax and VAT

New research commissioned by the Charity Tax Group [CTG] and undertaken by London Economics shows that VAT continues to place a significant burden on UK charities, with irrecoverable VAT now costing charities £1.8bn a year. The research also highlights the importance of existing VAT reliefs and exemptions for the charity sector, against a backdrop of calls for a widening of the VAT base both in response to Brexit and to pay for the cost of the COVID-19 pandemic.


Refreshed Charity Governance Code

The refreshed Code has been launched this week.  The main changes see clearer recommended practice in the renamed Equality, Diversity and Inclusion (EDI) Principle, and updates to the Integrity Principle to emphasise ethics and the right of everyone who has contact with the charity to be safe.  The Steering Group notes that charities and boards would like more guidance on how to improve their approach to EDI and the Steering Group is asking charity umbrella and infrastructure bodies to provide more guidance and support to charities, to help them meet the recommended practice in the Code. Bates Wells’ Partner Simon Steeden explains the main changes here.

Tesse Talks!

Our very own Tesse Akpeki has launched a new podcast “Tesse Talks” in which she plans to explore cutting edge leadership ideas and concepts.  The podcast has been approved by Apple, Google, Sound Cloud and ITunes.   

Data Protection 

International data transfers

In a new blog “A bumpy road ahead for international data transfers” Bates Wells’ Victoria Hordern and Michael Charalambous examine the implications of new European recommendations for organisations transferring data outside the EU.

Processing health data during clinical trials

The Medicines and Healthcare products Regulatory Agency has released a guidance document on managing access to electronic personal health data processed during clinical trials. The guidance document is specifically intended to assist sponsors, contract research organisations and investigator sites in complying with their processing obligations. The essential premise of the guidance document is that the use of electronic healthcare records (EHRs) provides new challenges to the protection of patient confidentiality during clinical trials. In particular, the guidance document emphasises the importance of using EHR systems that have the capacity to restrict access to relevant information about patients in the specific trial. 

ICO fines
The Information Commissioner’s Office has fined a Lincolnshire mortgage broker £50,000 for sending thousands of nuisance texts.


The Organisation for Economic Co-operation and Development has published a report, Taxation and Philanthropy, which says that governments should strike a balance between encouraging philanthropy through tax support and ensuring effective public policy.  It says that there are concerns in some countries about the rising number of very large private philanthropic foundations established by ultra-high-net-worth individuals who ‘may gain a disproportionate influence over how public resources are allocated’.  Other suggestions in the report include cutting back tax exemptions for commercial income of philanthropic entities, to minimise the risk of putting them at a competitive advantage over for-profit businesses.


The Department for Education has:

  • Published a new suite of model funding agreements;
  • Announced further measures to ensure next year’s GCSE and A level examinations are fair. Measures include more generous grading than usual and students receiving advance notice of some topic areas in order to focus their revision. Additionally, the Department is working with Ofqual to develop contingency processes should a student miss an exam due to self-isolation.
  • Announced that all university students returning after the Christmas break will be offered Covid testing and that universities should stagger the return of students.

Ofsted has announced that it will be returning to inspections in 2021, which will happen in phases, with no graded inspections planned before the summer term.
Ofqual‘s Dame Glenys Stacey has written an article setting out how Ofqual has approached the task of ensuring exams are fair in light of Covid.
Senior staff ‘ignored our Covid fears’, say striking teachers – Schools Week reports on a primary school where teachers are set to strike after their concerns relating to Covid-19 were “ignored”.

Social finance and social impact investing news 

Why is social innovation needed for the recovery? – Big Society Capital has announced that it will be launching ‘Ideas for Impact’, which will award up to £30,000 in funding, as well as in-kind support, for organisations who have ideas on how to use social investment to solve social problems in the U.K.

What kind of society do we want to build? This autumn’s Philanthropy Impact Magazine is being published in four parts; part two has just been published, and contains articles covering a range of topics in the philanthropy and social impact investment space.  

As part of the Impact Papers series, Pioneers Post has published a number of articles on some of the key discussions from “The C Summit”, a European corporate philanthropy and social investing summit recently co-hosted by EVPA and Dafne, including presentations from:

International development 

The UK has announced emergency funding to help people in Yemen. 

Public Procurement 

The UK government has deposited an instrument of accession to join the World Trade Organization (WTO) Agreement on Government Procurement (GPA), with the UK’s membership of the GPA taking effect on 1 January 2020. The GPA is a WTO agreement which aims to open up government procurement markets among its parties and ensure open, fair and transparent conditions of competition. The extent to which each GPA party has agreed to be bound by GPA rules is set out in member-specific “coverage schedules”. When a procurement activity is covered by the GPA, the procuring party cannot discriminate in favour of domestic entities or between entities of different parties to the GPA. The GPA also sets out various procedural requirements that apply to tendering processes.

State Aid

The House of Lords Library has published an article on the Draft State Aid (Revocations and Amendments) (EU Exit) Regulations 2020 (Draft Regulations). The article notes that the issue of state aid policy has been one of the main sticking points in the future relationship negotiations between the EU and the UK. The EU wants any deal to include commitments on state aid as part of ‘level playing field’ provisions, to ensure fair competition between the UK and the EU single market. The EU has been seeking more detail on what the UK’s future domestic state aid policy will look like. The UK has indicated it is willing to include some high-level principles on state aid in an agreement. However, the detailed design of the UK system will not be worked out until later.

In the House of Commons, a delegated legislation committee called on the government to provide more detail about the UK’s future subsidy control regime, commenting that WTO anti-subsidy rules are “suboptimal” and do not include provisions on services. Paul Scully, Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy, responded that the timescale for developing a new UK state aid regime would depend on negotiations with the EU and other countries in terms of free trade agreements, and discussions with businesses and government at every level, including the devolved administrations. The government will publish guidance as soon as possible on the international commitments that will apply in the UK on 1 January 2021, covering the WTO rules and any commitments the UK had made in free trade agreements.


For insolvency procedures started since 1 December 2020, certain debts due to HMRC but held by companies when they enter formal insolvency will rank as secondary preferential debts in the order of priority.  This means that they will be paid ahead of secured creditors holding a floating charge, and ahead of non-preferential creditors (eg suppliers).  The HMRC debts covered by the new rules include VAT, and those relating to PAYE, employee National Insurance contributions and student loan deductions.  HMRC has issued a policy paper explaining the changes.

Campaigning and elections

The Government has confirmed plans to repeal the Fixed-term Parliaments Act


OSCR is urging Scottish charities with a financial year ending 31 December not to leave it until the last minute to submit accounts. Although OSCR has introduced a a ‘grace period’ of 9 months to submit annual information to recognise the ongoing challenges due to COVID-19, the regulator says it would still encourage all charities who are able to submit their documentation on time to do so.
OSCR has published its opening hours over the festive season.

Northern Ireland 

CCNI has issued a registration update stating that its registration team will this week be issuing updates to over 1,000 organisations which are currently waiting to be contacted to apply for charity registration, as well as those which are known as “section 167 organisations” (i.e. organisations governed by the law of another jurisdiction but that operate in Northern Ireland). The aim of the updates is to provide reassurance that the organisations will be contacted by CCNI in the future to apply for registration as part of a managed process, and to provide an opportunity to update their details if necessary.

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 December 9, 2020.