As we go to press, Scotland has said ‘no thanks’ but the UK nevertheless faces a substantial redesign of its parliamentary system. There is a sense that things will never be the same again. Over the coming weeks there will be much written about the level of turn out in Scotland and the lessons that we can all learn about engaging successfully with our individual constituencies.

The party conference season begins this weekend just as the designated ‘pre-election period’ set out in the Lobbying Act 2014 begins. All charities who are engaged in any type of campaigning will need to establish whether they are required to register and will need to consider the Electoral Commission’s Guidance.

Closer to home the new Chief Executive of the Charity Commission, Paula Sussex, has just taken office and has promised that the Commission will do more to deter wrongdoing in the sector.

The press concern over Charity Chief Executive pay continues and the sector is looking afresh at issues of transparency and what we tell our stakeholders. Of course, the new SORP will make certain new disclosures compulsory.

There is a lot going on. As we move into the Autumn we hope that you will find this newsletter helpful in keeping you up to date.

Jo Coleman

charities@ibblaw.co.uk | 08456 381381 | U @CharityNotesUK

Charities team newsletter: Autumn 2014

HMRC has updated its guidance on VAT for charities, replacing the guidance which had been in place since January 1995. The updated guidance includes an introduction to VAT for charities and provides information on the implications of VAT for charities, the VAT treatment of income received, VAT reliefs on purchases, fuel and power, and charity events.

http://bit.ly/VciYF8

Please note that the Charity Tax Group has issued a health warning, having noticed that only certain parts of this VAT guidance have been updated, with some parts of the guidance remaining out of date. If you are using the Guidance, please double check with your accountant or other VAT specialist before relying on the information it contains, until HMRC releases a completed update.

HMRC’s new VAT guidance for charities

The Charity Commission has updated its guidance for charity trustees on their duties to promote the welfare of children and to protect them from harm. The principal changes include an update on the Charity Commission’s regulatory role in relation to

safeguarding, a new section for charities working directly with children abroad and also information on the Disclosure and Barring Service (which replaced the Criminal Records Bureau and the Independent Safeguarding Authority).

Charity Commission updates safeguarding guidance

charities@ibblaw.co.uk | 08456 381381 | U @CharityNotesUK

The Charity Commission has issued an “alert” , stating it believes that serious incidents are being underreported, which prevents the Commission from being able to assess the true scale and nature of risks facing charities. The Commission is also concerned that failure to report serious incidents could put some charities and their work at risk, where the trustees need assistance to handle a serious incident.

An incident is “serious” and must be reported to the Charity Commission if it risks or results in significant loss of a charity’s money or assets, damage to a charity’s property or harm to a charity’s work, beneficiaries or reputation.

The most common types of incidents reported include fraud, theft and confirmed safeguarding issues. The alert makes it clear that the Commission’s regulatory response to a serious incident will reflect:• whether or not trustees made a

serious incident report; and• how promptly the serious incident

report was made.

If trustees fail to act responsibly in relation to an incident (including failing to report at all, or not reporting promptly enough), the Commission may consider this to be mismanagement by the trustees and take regulatory action, particularly if further abuse or damage has arisen following the initial incident.

Charity Commission reminds charities to report serious incidents

In June, the Charity Commission started an eight-week consultation into proposals to collect more information on charities in their annual returns, including suggestions that all charities with incomes over £50,000 would have to declare all money they spent on campaigning, and all money received from the government.

NCVO, Acevo and the Charity Finance Group have all heavily criticised Charity Commission proposals, which

they consider go beyond its remit. They also criticised the proposals as they considered that collecting such information would place an unnecessary burden on charities, particularly, because “campaigning spending” was not effectively defined in the consultation.

The Charity Commission is now considering the responses to the proposals and it is expected that the outcome of the consultation will be announced in October.

Charity Commission consults on proposals to require charities to declare campaigning spending and government income in their annual returns

Last month, the Government announced plans to extend the VAT refund scheme. The VAT refund Scheme permits named museums, galleries and institutions, which allow free public access to their collections, to reclaim VAT on costs associated with those collections. Some £60million of support is provided through the VAT refund scheme each year to around 60 major UK institutions which are responsible for approximately 120 qualifying museums and galleries.

Under the extension to the VAT refund scheme, the V&A Museum of Design (Dundee) and Embrace Arts (the University of Leicester’s art centre) will be eligible to join the VAT refund scheme. In addition, other changes are being made to the scheme to enable institutions listed to open new premises and to take account of the closure of some institutions and the renaming of others.

Government agrees to extend VAT refund scheme for museums and galleries

The Culture, Media and Sport Committee has announced an inquiry to examine the role of society lotteries and their place within the current system which includes the Health Lottery and the National Lottery. The inquiry will also consider the following specific issues:

• how to ensure that the market delivers the maximum benefit to good causes;

• whether there is a case for relaxing the regulatory requirements relating either to the minimum amount of proceeds that a society lottery has

to return to good causes or in other areas; and

• the comparative regulatory positions and protections attaching to society lotteries, the Health Lottery and the National Lottery.

Written submissions can be made online until Monday 6 October 2014 at:

http://bit.ly/1AfIzh1

charities@ibblaw.co.uk | 08456 381381 | U @CharityNotesUK

The Culture, Media and Sport Committee announces a short inquiry into Society Lotteries

The Lobbying Act 2014 limits spending on a range of campaigning activities by non-party campaigners in the run-up to elections that could be seen as intending to influence voters at an election. The new rules take effect from 19 September 2014.

The Lobbying Act sets out an overall reduction in the amount campaigners can spend at UK Parliamentary General Elections, including a spending limit of £9,750 per Parliamentary constituency, and new reporting requirements both before and after the election.

Charities have been concerned from the outset that the Lobbying Act would make it more difficult for them to speak out on issues that could be regarded as party political in the lead-up to elections. Now that the Guidance has been published, there are concerns that it does not reflect assurances given that the normal campaigning activities of charities will not be restricted by the Lobbying Act. Specific concerns include:• how widely the “purpose test”, which

sets out what campaigning activity

would fall under the Lobbying Act, may be applied;

• a lack of clarity as to whether or not a charity needs to register with the Electoral Commission, as it depends on issues outside charities’ control, such as the policies of political parties; and

• uncertainty as to who a charity’s “committed supporters” are.

If you would like advice as to whether your charity may need to register with the Electoral Commission please contact Eva Abeles on eva.abeles@ibblaw.co.uk

Electoral Commission publishes guidance for charities on the Lobbying Act

The Human Dignity Trust (HDT)’s first application to the Charity Commission was rejected in June 2012 and that rejection was upheld in October 2013 on the basis that, while promoting human rights is a charitable purpose, changing the law was not.

In June 2014 the charity tribunal overturned the Charity Commission’s decision and rejected the argument that HDT’s purposes were “unclear or ambiguous”, as well as rejecting the Charity Commission’s narrower interpretation of the meaning of human

rights. The tribunal held that HDT was established for the purposes of protecting and promoting human rights and the sound administration of the law, which are exclusively charitable under the Charities Act 2011. However, the tribunal limited the case to its facts and stated that: “as a matter of law this decision is confined to its own facts and does not establish a legal precedent for the registration of other prospective charities”.

charities@ibblaw.co.uk | 08456 381381 | U @CharityNotesUK

Human Dignity Trust is given charitable status

Jo Coleman drew the Charity Commission’s attention to the “lessons for charities” section of its Operational Compliance Report on Southwark Muslim Women’s Association, which appeared to suggest that members of the Senior Management Team should not usually attend trustee meetings.

The Charity Commission has now revised this section of the report to clarify the position that : “staff members

can attend board meetings at the invitation of the trustees. However, when staff members attend trustee meetings, their role in the meeting should be clear, for example as a minute taker or as an ‘expert adviser’ on an agenda item (they should not participate in making decisions).”

Charity Commission amends its “lessons for charities” in its Operational Compliance Report following comments by Jo Coleman

The Taskforce on Social Impact Investment, which includes representatives from seven countries and the EU, makes a number of recommendations in its new report, Impact Investment: The Invisible Heart of Markets. Some of its recommendations have already been introduced in the UK, for example Social Investment Tax Relief and the introduction of “Big Society Capital” to lend money to build the social investment market. http://bit.ly/1uzOo6q

The Taskforce’s report is accompanied by recommendations from a UK advisory board, which makes further suggestions such as that all pension funds should

be required to offer a social investment option to individual investors as well as improved transparency around the level of bank lending into deprived communities.

CAF has also published its own report on the future of social investment: Returns Policy? What the next decade holds for social investment, which sets out eight recommendations on how the benefits of social investment can be maximised for charities. However, the CAF report notes that many charities would actually prefer cheap loans. http://bit.ly/1BQk1Lr

Two new reports published on Social Investment

IBB’s charities team and Kingston Smith will be giving their annual update on issues affecting charities.

Tuesday 20 January 2015IBB Solicitors30 Windsor StreetCapital CourtUxbridgeUB8 1AB

To register, please contact:kiki.panesar@ibblaw.co.uk01895 207248

charities@ibblaw.co.uk | 08456 381381 | U @CharityNotesUK

Save the date: charity update seminar

Jo ColemanPartner01895 207809jo.coleman@ibblaw.co.uk

Contact IBB Solicitors charities team

Eva AbelesSenior solicitor01895 207964eva.abeles@ibblaw.co.uk

Peter BurnettConsultant (non-practising)01895 207887peter.burnett@ibblaw.co.uk