Charities Alert July/August 2012 - Crowe Horwath International

Issue 04/2012
July/August 2012
Charities
Alert
Inside this issue
Sector news
Publication of Lord Hodgson’s statutory
review of the Charities Act 2006
Charity Commission publishes its
Annual Report
Risk information for small charities
Charities play an essential role in society
Deadline extended for registration of
excepted charities
Guidance and
technical
New public benefit guidance
Charities and internal audit
Taxation
The Small Charitable Donations Bill
Compound interest
Listed building works
Upcoming events
Trustee essentials seminar
Risk management workshops, including
Charity Magique

Charities Alert Issue 04/2012
Given that a number of the
recommendations require primary
legislation in order to become law, it
is unlikely that a new Bill would be
passed before 2015.
Sector news
Publication of Lord
Hodgson’s statutory
review of the
Charities Act 2006
In July, Lord Hodgson published
the findings from his review of the
Charities Act 2006. The review had
been commissioned in line with the
government’s commitment to ensuring
that the Act was reviewed within five
years of being enacted.
Lord Hodgson’s report, “Trusted and
Independent: Giving charity back to
charities” has generally been well
received within the sector. The next
stage will be a review by Parliament
followed by the Public Administration
Select Committee’s consultation, in
which Lord Hodgson’s statutory review
is the centrepiece. The consultation
runs until 14 September 2012.
Given that a number of the
recommendations require primary
legislation in order to become law,
it is unlikely that a new Bill would be
passed before 2015.
In reviewing the Act and making
recommendations, Lord Hodgson
was guided by seven basic principles,
which included:
the regulatory framework should
allow trustees to use their own
judgement, whilst reducing
unnecessary bureaucracy and
red tape
charitable status should be
regarded as a privilege and not
a right
both the sector and the regulator
should remain independent of
government influence
there should be greater clarity
in legislation and regulatory
requirements to encourage
compliance
Charity Commission publishes its
Annual Report
The Charity Commission has published its latest Annual Report and Accounts. The
report sets out how the Commission has delivered so far against its new strategic
plan issued in January 2012 and how it has met the KPI objectives set out in its
previous plan. The report also demonstrates how the Commission’s strategic
priorities to encourage compliance and accountability and strengthen charities’ selfreliance
have translated into its work with charities in 2011/12.
The report highlights the Commission’s success in moving its services online, with
99.9% of registrations in the year under review being online applications and the
requirement since 2011 for all annual returns to be submitted online.
Sam Younger, Chief Executive of the Charity Commission, noted that the regulator
will need to build on these successes when the new strategy comes into force in
October:
“This report shows that we’re heading in the right direction – performing across the
board, moving traffic online, creating excellent online advice – all these trends will
need to continue if we are to maintain trust in charities while adjusting to reduced
resources.”
Risk information for small charities
The Charity Commission has recently set up a web resource area for small
charities. The area includes guidance on setting up and running small charities and
a copy of the small charities constitution.
The Commission has also published some web pages on risk specifically designed
for small charities. The pages provide 10 useful questions charities should ask
themselves to avoid problems, including areas such as:
ensuring that the charity is working in line with its governing document
making sure that all trustees are properly appointed
the importance of preparing accounts and Trustees’ Reports.
The pages also cover simplified risk management for small charities and how they
can avoid typical risks.
Charities play an essential role in society
A recent survey conducted by Ipsos MORI on behalf of the Charity Commission has
found that 37% of people felt charities played an essential role in society compared
to 30% in 2010, and overall 96% of people felt that the charities’ role was essential,
very important or fairly important. Overall public trust in charities remained high
with a mean score of 6.7 out of 10. The research also continued to show that the
overwhelming majority of people believed charities should provide the public with
information on how they spend their money (96%) and on how they benefit the public
(94%).
The most common reason given for why some charities are trusted less was not
knowing how their money was spent (36%), whilst the most common reason given
for trusting a charity more was having seen or experienced what they do (38%).
Other factors influencing ‘trust’ included whether people had heard of the charity or
whether it was providing services within the local community.
the voluntary principle should
remain at the heart of the charity
sector.
Awareness of the Charity Commission and its work had also increased over the past
six years with 55% of those interviewed having heard of the Commission compared
to 46% in 2005.
A number of the recommendations
have provoked debate in the sector.
Further details can be found here.
Commenting on the report, Dame Suzi Leather said:
“I am delighted that these research findings confirm that public trust and confidence
in charities remains high. During these difficult economic times for charities, I hope
the sector will take heart from this vote of confidence, and be reassured that the
public recognises the essential role charities play in our society.”

Charities Alert Issue 04/2012
I am delighted that these
research findings confirm that
public trust and confidence in
charities remains high.
Deadline extended
for registration of
excepted charities
The deadline for excepted charities with incomes below
£100,000 to register with the Charity Commission has been
extended from 1 October 2012 to 31 March 2014.
As highlighted in our Charities Alert 05/2011, under the
original provisions of the 2006 Charities Act excepted
charities (including scout and guide groups, armed forces
charitable funds and parochial church councils) with incomes
over £100,000 had to register from 31 January 2009 with the
Commission, but those with incomes under £100,000 were
provided with an extended deadline.
As part of Lord Hodgson’s recommendations following his
review of the Charities Act, the registration for excepted
charities is also likely to be reduced from £100,000 to
£50,000 to £25,000 over a three year period.
Guidance and technical
New public benefit
guidance
The Charity Commission has released its revised guidance
on public benefit. The guidance takes into account the
findings of the Upper Tribunal case last autumn, and now
states that it is only necessary for an entity to have charitable
purposes to be regarded as a charity, rather than to be
judged on the activities it undertakes, as stated by the
previous guidance. A charitable purpose must fall within the
list of purposes set out in the Charities Act 2006 and, more
importantly, must be for the public benefit.
The guidance has been provided in a new online format on
the Commission’s website, making it easier for trustees to
select the parts relevant to their organisation. It also sets out
more clearly what the public benefit duties of charity trustees
are, and indicates which areas of the guidance trustees are
required by law to have due regard to and which parts are
additional explanatory information.
The guidance is subject to a three month consultation period
which closes on 26 September 2012. The Commission has
requested responses from trustees on both the content
of the guidance and the new online format and layout.
Respondents are able to post responses and comments on
the guidelines on a blog.
Dame Suzi Leather, chair of the Charity Commission
commented:
“We have worked hard to write guidance that accurately
reflects the law but is accessible for a charity trustee who just
wants to know what to think about when making decisions
that might affect their charity’s public benefit. We hope the
online format will make it easier.”
The new guidance will replace existing public benefit
guidance and supplementary fee-charging guidance.
Supplementary guidance on advancing religion, advancing
education and relieving and preventing poverty will be
reviewed in light of this consultation.
The Commission has also published its legal analysis of
public benefit for comment.
We have provided further details on the revised guidance in a
briefing note.
Charities and internal audit
An increasing number of charities are considering the need
for an internal audit function, and thinking about what form
this should take. Options range from employing a dedicated,
in-house resource, to outsourcing the function to specialist
suppliers. We have developed some initial guidance to help
trustees weigh up their options in this respect and further
details can be found here.

Charities Alert Issue 04/2012
Taxation
The Small Charitable
Donations Bill
As highlighted in our previous Charities Alert,
03/12, following a consultation period, the
government published the Small Charitable
Donations Bill on 21 June. Further details on the
implications of the Bill can be found in our charity
tax briefing note.
Compound interest
In July, the European Court of Justice (ECJ)
released its decision as to whether compound
interest was payable on Condé Nast/Fleming
claims (under the Littlewoods case). The ECJ has
rejected the company’s contention that they had
any right to claim back compound interest under
European Law and has referred the case back to
the UK Courts.
Having reviewed the wording of the judgement
it seems likely that claims for compound interest
will be dismissed once the case has been heard
in the UK. Although this was always the likely
outcome it will come as disappointing news to
those charities that have applied for compound
interest following settlement of their retrospective
VAT claims.
Listed building works
HMRC has recently announced changes to the
proposed listed buildings legislation. Where
listed building consent had been applied for on
or before 21 March 2012 the extension for zero
rating on these works, where applicable, will
now be extended to 30 September 2015. All
other projects will continue to be subject to the
standard rate of VAT on or after 1 October 2012.
Upcoming events
Trustee essentials seminar
We are delighted to be hosting the second in an occasional series of
seminars exploring key issues for trustees to consider in the current
climate. This will include an in-depth look at key areas that underpin
the health of every charity coupled with other invaluable information for
trustees.
The seminar will take place on Monday 10 September 2012 between
09.00 and 16.00 at our London office. There will be a charge of £50,
plus VAT, to attend the event and registration is essential. Lunch and
refreshments will be available.
Space is limited on this course so please contact
denise.peters@crowecw.co.uk to reserve your place or click here to
obtain further information. Do pass this information to your trustees and
also let Denise know if you would like to be invited to a future similar
seminar.
Risk management workshops,
including Charity Magique
We regularly run free half-day risk workshops covering best practice in
risk management and a demonstration of Charity Magique, the webbased
risk management tool tailored for charities. The next workshops
are at our London office on 22 November and 29 November, from
09.30 to 12.30, followed by buffet lunch.
Please contact denise.peters@crowecw.co.uk if you would like further
information or to book a place on either of the above dates. A maximum
of two attendees per organisation may register for these workshops.
Further information is available in our VAT briefing
note.
We hope you find Charities Alert of interest. If you have questions about any of the topics covered, please
contact Pesh Framjee, Head of our Not for Profit group, or Sally Kirby, Editor of Charities Alert.
Office locations and contacts:
Cheltenham – Mike Hall
01242 234421
London – Pesh Framjee
020 7842 7100
Thames Valley – Alastair Lyon
0118 959 7222
Kent – Ian Weekes
Maidstone
01622 767676
Tunbridge Wells
01892 700200
Midlands – Helen Drew
0121 543 1900
Manchester – Vicky Szulist
0161 214 7500
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