Post on 19-Jan-2015
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Legal Update 2011-2012
Wednesday 16th May 2012
Giselle Davies, Partner &Gemma Lewis, Senior Associate
Legal update
• Regulation• Risk• Public benefit• The future
Regulation• Charities Act 2011• Changes to Charity registration• HMRC – What’s new?• Charity Commission – What’s new?
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
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
Charities Act 2011
So what……..?A few timely reminders:• “Registered Charity” statement• Land transactions• Authority to execute
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
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”
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”
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
Changes to Charity Registration
• Requirement to register (previously exempt / excepted)
• Registration process:• Online• All documentation to be provided at outset
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
Definition of Charity for tax purposes• Jurisdiction condition• Registration condition• Management condition (“fit and proper persons
test”)
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.htmHelpline: 0845 3020203
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
Other Gift Aid changes• £50,000 donation cap• Small donations bill
Charity Commission
What’s new?• Risk Framework• Strategic Review• New / updated Guidance
Risk
• Greatest Risk – Loss of income• A False Economy Study• Acevo• London Voluntary Service Council• NCVO• Charity Commission
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
Risk – loss of income
Find new funds – Oxfam Charity shops success Incorporate/collaborate/merge Survive
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
Rates - Why worry about them? • Not new tax • No change in law But… Charity Commission alert December 2011
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
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
Rates - Can you escape?
• Charitable relief • 80% mandatory relief • 20% discretionary relief
Hardship relief
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
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
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?
Rates - Risk to Charity Loss of relief Can the Charity afford rates and rent? Reputation Risk What to do if offered a deal
Rates - Protect yourself• Genuine need to occupy• Charity Commission recommendations• Break Clause• Take advice – rating surveyor• Full trustee minutes
Public benefitThe “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
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
The future• Review of the Charities Act 2006• Public benefit consultations• Implementation of further parts of Charities Act
2006 (now in Charities Act 2011)
Cardiff Derby Nottingham
Thank You
Contact Details
Giselle DaviesDD : 029 2039 1797 giselle.davies@geldards.com
Gemma LewisDD : 029 2039 1877 gemma.lewis@geldards.com