A round-up of recent law changes relevant to charities, including the Charities Act 2011.

1. Legal Update 2011-2012
Giselle Davies, Partner &
Gemma Lewis, Senior Associate
Wednesday 16th May 2012

2. Legal update
• Regulation
• Risk
• Public benefit
• The future

3. Regulation
• Charities Act 2011
• Changes to Charity registration
• HMRC – What’s new?
• Charity Commission – What’s new?

4. Charities Act 2011
• Consolidating Act
• Replaces:
• Recreational Charities Act 1958
• Charities Act 1992
• Charities Act 1993
• Charities Act 2006
• Royal Assent 14/12/11
• In force 14th March 2012
• Runs into 358 sections and 11 schedules

5. Charities Act 2011
In a nutshell….
• Nothing changes except section / Act references
• If not yet in force from Charities Act 2006 – still
not in force

6. Charities Act 2011
So what……..?
A few timely reminders:
• “Registered Charity” statement
• Land transactions
• Authority to execute

7. Charities Act 2011
“Registered Charity” Statement requirement
• Was s.5 Charities Act 1993 - now s.39 Charities
Act 2011
• Charities with income over £10,000
• Applies to:
• Notices, adverts, documents if soliciting money
• Cheques, purchase orders etc
• Bills, invoices, receipts, credit notes
• Fine for person authorising issue without
statement

8. Charities Act 2011
Land Transactions
• Was s.36-39 1993 Act - Now s.117-126 2011 Act
• Restrictions on dispositions – may require
consent or if not Charity Trustees MUST take
advice
• Special documentation requirements
• Who signs what – “charity” is different from
“charity
trustees”

9. Charities Act 2011
Land transactions – document requirements
• Acquisition by charity
• Statement
• Disposal by charity & mortgage / charge by
charity
• Statement & Certificate of Charity Trustees
of “interest in land” freehold or leasehold or other”

10. Charities Act 2011
Statutory Authority for execution on behalf of
charity trustees
• Was s.82 1993 Act
• Now s.333 2011 Act
• May delegate to at least two of their number

11. Changes to Charity Registration
• Requirement to register (previously exempt /
excepted)
• Registration process:
• Online
• All documentation to be provided at outset

12. HM Revenue & Customs
What’s new?
• Implementation of F.A. 2010 definition of
“charity” for all taxes purposes 1/4/12
• Changes to wording of Gift Aid declarations
• Other Gift Aid changes

13. Definition of Charity for tax purposes
• Jurisdiction condition
• Registration condition
• Management condition (“fit and proper persons
test”)

14. Requirement to register with HMRC
• Complete ChA1
• Changes to charity or managers – complete ChV1
• Declaration – sign and retain
www.hmrc.gov.uk/charities/tax/recognition.htm
Helpline: 0845 3020203

15. Gift Aid declarations
• New model declarations published 24/2/12
• Claims based on “old” wording accepted until
31/12/12
• Must say donor will pay income / capital gains tax
at least equal to the amount of tax that all
charities / CASCs they donated to will reclaim
that year

16. Other Gift Aid changes
• £50,000 donation cap
• Small donations bill

17. Charity Commission
What’s new?
• Risk Framework
• Strategic Review
• New / updated Guidance

18. Risk
• Greatest Risk – Loss of income
• A False Economy Study
• Acevo
• London Voluntary Service Council
• NCVO
• Charity Commission

19. Risk
Greatest Risk – Loss of income
• Charity Commission
• The National Association of Voluntary and
Community Action
• A NCVYS Survey
• Decline in family foundation funding
• The Charity Market Monitor 2011
• Increase in the challenging of legacies

20. Risk – loss of income
• Find new funds – Oxfam Charity shops success
• Incorporate/collaborate/merge
• Survive

21. Other risk issues
• The pensions time bomb – £800 million charity
pension deficit
• Charity Finance Magazine May 2012
• Wedgwood Museum Trust
• The Great Rate Escape debate

22. Rates - Why worry about them?
• Not new tax
• No change in law
But…
• Charity Commission alert December 2011

23. Rates – Why controversial now?
Credit Crunch
• Vacant properties
• Landlords don’t want to pay rates
• Charity relief makes Charity occupation
attractive
• Charity commission investigation into 700
cases

24. Rates – the financial dilemma
• “non domestic rates”
• Commercial not domestic tax
• Administered by local authority
• Rateable value x multiplier
• £10,000 x 42p = £4,200 per annum

25. Rates - Can you escape?
• Charitable relief
• 80% mandatory relief
• 20% discretionary relief
• Hardship relief

26. Rates - What relief will be awarded?
• Not automatic, must apply
• Need to show:
• established for charitable purposes
• used wholly or mainly for “Charitable purposes”
• registered charity number good evidence
• charitable purposes can be problematic
• Other issues such as mixed use

27. Issues to consider
• Mixed use properties
• Use of trading subsidiary
• Charity Shops – specific relief
• Trading by beneficiaries
• Sale of goods by beneficiaries
• Sale of goods made by beneficiaries

28. Rates relief - Too good to be true?
• After 3 months vacant property rated
• Expensive for landlords
• Landlord “inducements”
• Willing Charity can relieve liability
• Good business or tax evasion?

29. Rates - Risk to Charity
• Loss of relief
• Can the Charity afford rates and rent?
• Reputation Risk
• What to do if offered a deal

30. Rates - Protect yourself
• Genuine need to occupy
• Charity Commission recommendations
• Break Clause
• Take advice – rating surveyor
• Full trustee minutes

31. Public benefit
The “Independent Schools” case
• The Charities Act 2006
• Guidance published by the Charity Commission
after the Charities Act 2006
• Challenged by the Independent Schools Council
• 14 October 2011 – Decision of the Upper Tribunal
(Tax and Chancery Chamber)
• Wider Implications of the Tribunal’s decision
• Charity Commissions’ Current Position

32. Public benefit
The “relief of Poverty/restricted class of beneficiaries”
case
• Charities Act 2006
• Prevention or relief of poverty
• AG’s second charity law reference
• Outcome – restricted class is acceptable

33. The future
• Review of the Charities Act 2006
• Public benefit consultations
• Implementation of further parts of Charities Act
2006 (now in Charities Act 2011)

34. Thank You
Cardiff Derby Nottingham

35. Contact Details
Giselle Davies
DD : 029 2039 1797
giselle.davies@geldards.com
Gemma Lewis
DD : 029 2039 1877
gemma.lewis@geldards.com