Bates Wells Briefing for Charities & Social Enterprises | 31 March

Our weekly round up of news and updates from across the sector.

Services
Charity
Sectors
Charities, Social Enterprise
Type
News

Bates Wells Highlights

Last week we mentioned the Government has responded to the Law Commission’s recommendations for reform of charity law.  See our detailed summary of what the government has accepted and rejected.

Bates Wells publishes the top 5 tips to consider in anticipation of the upcoming Children’s Code.


At a glance

Provisions of the Corporate Insolvency and Governance Act 2020 relating to wrongful trading have been extended to 30 June 2021.

The Charity Commission has announced the launch of the Revitalising Trusts Programme in Wales.

A new report by New Philanthropy Capital analyses the government’s Levelling Up Fund to understand what it can be spent on. 

BOND has launched a new toolkit, “Developing and modelling a positive safeguarding culture”.

ACF has published  a “Safeguarding framework for foundations”. 


Coronavirus – regulations implementing easing lockdown restrictions

On 22 March 2021, the UK government made the Health Protection (Coronavirus, Restrictions) (Steps) (England) Regulations 2021 (SI 2021/364). They apply in England and came into force on 29 March. They implement the remainder of Step 1 and all of Steps 2 and 3 of the government’s roadmap out of lockdown for England, which outlines a gradual step by step approach to the easing of restrictions on businesses and venues following the national lockdown.  At least five weeks is required between the implementation of each Step (four weeks to assess the data, and one week’s notice to businesses). It is an offence to contravene a Step restriction and a fixed penalty notice may be issued for any such offence. For business restriction offences, the first amount of the fixed penalty is set at £1,000, doubling for each subsequent offence up to a maximum of £10,000.

The government has also published a one-year report on which powers in the Coronavirus Act 2020 are currently active.


Coronavirus – government funding

BEIS has published details of its new Restart Grant scheme, which aims to support eligible businesses in reopening safely as COVID-19 restrictions are lifted by giving them a one-off grant.  Under the scheme, all rate-paying businesses trading in England in the non-essential retail, hospitality, accommodation, leisure, personal care or gym sectors (and meeting certain other subsidy allowance and solvency conditions) can apply for one-off grants from their local councils. The maximum amount available is:

  • Non-essential retail. A one-off grant of up to £6,000 per business.
  • Hospitality, accommodation, leisure, personal care and gym. A one-off grant of up to £18,000 per business.

Businesses will not be eligible if they have already obtained financial support from certain other local council administered support schemes that exceeds the “permitted subsidy allowance”. Grants will be available from 1 April 2021, but businesses can submit their applications in advance. Details on how to apply can be found on local council websites.


Coronavirus: Extension of certain insolvency measures, but no extension of the relaxations around meetings

The following provisions of the Corporate Insolvency and Governance Act 2020 (CIGA 2020), which were due to expire in March and April 2021, will now expire on 30 June 2021 thanks to new regulations:

  • The suspension of wrongful trading liability
  • The restrictions on presenting winding-up petitions and on winding-up orders
  • The exclusion of small suppliers from the prohibition on terminating a supply contract for the customer’s insolvency

And the temporary provisions around moratoriums have been extended until 30 September 2021.

Note that the temporary relaxations around general meetings of companies and other bodies have not been extended and will end on 30 March 2021.
You can find the government’s summary of these measures to date here.


Coronavirus: Companies House – end of automatic extension for filing accounts

Companies House has amended its guidance on applying for more time to file the company’s accounts; among other things it reminds users that the automatic extensions for filing deadlines between 27 June 2020 and 5 April 2021, which were granted by the Corporate Insolvency and Governance Act 2020 in light of the COVID-19 pandemic, will come to an end for filing deadlines that fall after 5 April 2021.  Companies House has also reminded users that, as noted in the guidance, there will also be no further automatic extensions for, among other things, confirmation statement and other event-driven filings after 5 April 2021.


Charity Commission

Inquiry report

The commission has published its inquiry report into Afghan Heroes.  As well as issues of poorly managed financial transactions and unauthorised trustee remuneration, the inquiry focused on the charity’s relationship with a fundraising company, which raised around £3.5 million from the public, of which only around 20% was passed on to the charity, the rest being retained the company. The commission concluded that the fundraising did not comply with fundraising regulations, as there were no valid written agreements in place between the charity and the company, and the company did not make solicitation statements. The commission appointed an Interim Manager to take over the running of the charity, who worked to pursue the fundraising company for all the monies it raised on behalf of the charity. This work took several years, and was ultimately unsuccessful as the company was placed into administration.

Revitalising Trusts Programme

The Charity Commission has announced the launch of the Revitalising Trusts Programme in Wales. The programme is run in partnership with Community Foundation Wales, with funding from the Welsh Government. The Commission plans to contact over 200 charities in Wales to release a target of £25 million that is currently lying idle in dormant accounts.

Interim Manager appointment

The Charity Commission has announced that it has appointed interim managers to Gilbert Deya Ministries, a registered charity based in South London, with objects to advance the Christian religion and provide assistance for persons in condition of need, hardship or distress. It was placed under inquiry following concerns about its governance and financial management. The interim managers have been appointed to review and assess the charity’s financial position and to make recommendations around whether it remains solvent and viable.


Governance

The Financial Reporting Council has announced that it will be hosting a series of webinars and roundtable discussions, following the announcement of the government’s consultation “Restoring trust in audit and corporate governance”.  


Sector General

A new report by New Philanthropy Capital analyses the government’s £5.17bn Levelling Up Fund to understand what it can be spent on.  The report concludes there are relatively few opportunities for charities and civil society to benefit as the scheme will focus on capital investment over social infrastructure.

A new independent review will look at ways to reduce red tape for researchers.  It will look to identify practical solutions to bureaucratic issues faced by researchers such as overly complicated grant forms that require in-depth financial knowledge, a lack of clarity over funding available to researchers, and having to provide the same data multiple times in different formats to different funders. The system-wide review will conclude by early 2022, with interim findings due to be published this autumn. It will involve broad engagement with the whole UK research community, with a particular focus being placed on research undertaken in higher education institutions.


Climate change

The government has announced the planned creation of a second cycling and walking investment strategy for actions beyond 2021.

BEIS has published a consultation on proposals to mandate climate-related financial disclosures by large LLPs and private companies (those with more than 500 employees and more than £500m turnover), as well as quoted companies.  Companies would be required to report this information in the non-financial information statement which forms part of the strategic report.  The consultation closes on 5 May 2021.  It is intended that these regulations would apply to accounting periods starting on or after 6 April 2022.

The UK is now requiring its principal financial regulators to consider climate change.  The Financial Conduct Authority and Prudential Regulation Committee, which supervise financial services firms, must now take into account the Government’s commitment to transition to a net zero economy by 2050.

The recently passed Pension Schemes Act requires schemes to report on the climate risk associated with their investments from this Autumn. This follows from October 2019 when the government introduced its first ESG policies, requiring pension schemes to explain how they considered climate risk, as well as other environmental, social and governance factors in their investments. 


Safeguarding

BOND has launched a new toolkit, “Developing and Modelling a Positive Safeguarding Culture”.

ACF has published “SAFEGUARDING FRAMEWORK FOR FOUNDATIONS”. 


Data protection

ICO publishes guidance on the national security and defence exemption under the Data Protection Act 2018

The exemption can be found at section 26 of the Data Protection Act 2018 and serves to cover scenarios where personal data is processed, for example, to protect against terrorist threats. While this exemption will not be relevant for most organisations, the guidance may be useful for some charities who are involved in international safeguarding efforts.

Bates Wells publishes the top 5 tips to consider in anticipation of the upcoming Children’s Code.

This follows the recent reminder by the ICO of the imminent end of the transition period for the Children’s Code and provides a useful summary for charities to consider.

European Parliament calls for better enforcement of the GDPR

The European Parliament has published a press release, suggesting that supervisory authorities need better funding in order to be able to effectively enforce the GDPR. Member States may take this into account when allocating resources to supervisory authorities, which may subsequently lead to strong enforcement action taken by those authorities based in the EU.  


Education

See under Sector General above.

Area SEND inspections, which Ofsted carry out jointly with the Care Quality Commission, are set to begin again after being paused in March 2020 due to the impact of COVID-19. Ofsted has released that revisits to areas with a written statement of action will start from April 2021 with full inspection resuming from June 2021.

The Office for Students has published outcomes from two consultations on funding and outlines new plans to improve outreach to disadvantaged students.  

UKRI has written to UK higher education institutions setting out the next stage of its review of all Official Development Assistance (ODA) funding in the financial year 2021/22. The letter is focused on a key element of UKRI’s ODA funding – the Global Challenges Research Fund (GCRF) grants, and further letters will follow shortly for other parts of the GCRF and Newton Fund. UKRI will also write to individual grant holders to update on the next stage.


Support for vulnerable families

£165 million funding has been announced for the newly named ‘Supporting Families’ programme, previously known as the ‘Troubled Families’ programme.  The programme includes work to support people to leave abusive relationships, get support for mental health issues and help to find work.


Health and social care

The government’s recently published Mental Health Recovery Action Plan aims to respond to the impact of the pandemic on the mental health of the public, specifically targeting groups which have been most impacted including those with severe mental illness, young people, and frontline staff.

A new Office for Health Promotion is to lead national efforts to improve and level up the health of the nation by tackling obesity, improving mental health and promoting physical activity.

See here for Bates Wells analysis of the Mencap Supreme Court judgment we mentioned last week “Making money in your sleep? The Supreme Court rules on national minimum wage entitlement for carers working sleep-in shifts”.


International development

See under Safeguarding above


Culture and creative

The Edinburgh festivals are to receive half a million pounds to fund a new digital platform to promote talent and content to both international and domestic producers, and £500,000 will be made available for Festival organisers to increase their digital capabilities.

Ten creative teams from across the UK have been selected to develop a series of events, public engagement programmes and virtual projects as part of the Festival UK* 2022.


Insolvency

The Insolvency Service has launched new guidance for Official Receivers and has made it available for the wider insolvency profession.


Cyber security

See this Department for Digital, Culture, Media and Sport report detailing business and charity action on cyber security, and the costs and impacts of cyber breaches and attacks. Findings show that a quarter of charities (26 per cent) report having cyber security breaches or attacks in the last 12 months.


Scotland

OSCR is running a six week public consultation on proposed changes to sections of its ‘Meeting the Charity Test’ guidance on public benefit. The proposed changes are a response to the 29 January 2021 decision by the Court of Session on the charitable status of New Lanark Hotels Limited and New Lanark Trading Ltd.  The Court directed that both of these companies should be registered as charities on the basis of the facts in the case, and emphasised the unusual nature of the activities undertaken on the New Lanark World Heritage site. OSCR says that the proposed changes reflect the detail of the court’s findings on how public benefit should be considered when a charity is undertaking activities, including commercial trading, that do not further its charitable purposes. It has also taken this opportunity to clarify some of the language in the private benefit section. 


Crisis decision tool

Are you aware of our crisis decision tool? If your organisation is facing financial difficulties and you’re looking for guidance on the options available, we can help.


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 March 30, 2021.