Legislation
Charities Bill
The Bill had its Commons First Reading on 9 November. No date has been set for the Commons Second Reading.
Finance Bill
The Finance (No 2) Bill had its Commons First Reading on 28 March 2006 and its Commons Second Reading on 24 April 2006. It went to Committee on 2 and 3 May 2006 and Standing Committee A between 9 and 25 May 2006. Further scrutiny by Standing Committee A has been set for 6 and 8 June 2006.
For details of the areas affecting charities, please see below.
Scotland
Charities And Trustee Investment (Scotland) Act 2005 (Commencement No. 3, Transitional and Savings Provision) Order 2006
This came into force on 31 March 2006 and deals with the bringing into force of further sections of the Charities and Trustee Investment (Scotland) Act 2005 (the 2005 Act), as well as setting out various transitional and saving provisions.
Charities Accounts (Scotland) Regulations 2006
These came into force on 17 May 2006, and set out accounting requirements for charities with financial years beginning on or after 1 April 2006.
Charities Test (Specified Bodies) (Scotland) Order 2006
This came into force on 24 April 2006 and disapplies the charity test set out in the 2005 Act to certain bodies listed within the Order.
Protection of Charities Assets (Exemption)(Scotland) Order 2006
This came into force on 24 April 2006 and disapplies provisions of the 2005 Act relating to protection of assets of bodies removed from the register of charities in relation to certain bodies listed within the Order.
Company Law Reform Bill
A revised version of the Company Law Reform Bill (HL), as amended by the House of Lords in Grand Committee was published in two volumes on 25 April. The Bill began its Lords Report stage on 9 May.
Employment
The Transfer of Undertakings (Protection of Employment) Regulations 2006
These regulations, which came into force on 6 April 2006, update the previous 1981 TUPE regulations and confirm that TUPE applies to 'service provision changes', which includes situations where a client business outsources or contracts out a service to a contractor. There is also now an obligation on the outgoing employer to provide 'employee liability information', to the new employer.
National Lottery Bill
The Bill was considered by a House of Lords Committee on 13 and 21 March 2006, following its First and Second Readings in the Lords earlier this year. The Committee reported on 24 April 2006. The Bill received its Third Reading in the Lords on 23 May 2006 but no date has yet been set for further consideration in the Commons.
Pensions
'A' day has now happened – with effect from 6 April 2006, numerous regulations came into force governing a variety of issues simplifying the tax treatment of pensions. In addition, other regulations came into force covering issues such as consultation with employees regarding changes to pension schemes. During the course of this year, trustees of pension schemes are obliged to have a working knowledge of all matters in connection with their scheme including the documentation, investments etc. Due to the high number of regulations, these have not been listed.
Budget
The Budget was announced by the Chancellor on 22 March 2006 and contained certain anti-avoidance provisions relating to charities.
Dealings between a charity and a 'substantial donor'
The measures put in place with effect from 22 March will catch certain transactions entered into between a charity and what is called a 'substantial donor' on or after that date (broadly, a person (including a company and a connected person) from whom the charity in question receives at least £25,000 worth of certain types of tax deductible gifts (including Gift Aid) in a single 12 month period, or at least £100,000 or more over a six year period – in each case, with an additional 5 year "run off" period).
The intention behind the changes is to catch various categories of transactions between a charity and its substantial donors that are not at arm's length and that allow a donor to extract value from the charity, for example the sale or letting of property, or provision of services by a charity to a substantial donor; or by a substantial donor to a charity; an exchange of property between a charity and a substantial donor, the provision of financial assistance (ie a loan, guarantee, indemnity or financial arrangements compliant with Islamic law) to a charity by a substantial donor, or to a substantial donor by a charity; payment by a charity of remuneration to a substantial donor apart from payment for services as a trustee approved by the appropriate regulator or the courts; or investment by a charity in the business of a substantial donor as long as the business is not listed on a recognised stock exchange.
There are exemptions to these transactions listed within the legislation to cover transactions where HMRC is satisfied that they are engaged in for genuine commercial reasons on terms no less beneficial to the charity than those that might be expected of an identical arm's length transaction, so long as the transaction is not part of an arrangement for the avoidance of tax. These are financial assistance given to a charity by a substantial donor, the sale or letting of property, or the provision of services, where the transaction forms part of the business of the substantial donor, or transactions that are provided by a charity to a substantial donor in furtherance of the charitable purpose of the charity and which are no more beneficial to the substantial donor than could be obtained on arm's length terms. In addition, the new rules will not apply to a disposal at less than market value by a substantial donor to a charity to which section 587B Income and Corporation Taxes Act 1988 or section 257 Taxation of Chargeable Gains Act 1992 applies.
Where a charity takes part in any of the transactions that are not otherwise exempt, any payments made by the charity in connection with the transaction will be treated as non charitable expenditure.
Where the transaction is not a payment by the charity and is not on arm's length terms any difference between the actual terms and arm's length terms, so far as it favours the substantial donor, shall be treated as non-charitable expenditure and the charity will have its tax relief restricted.
A charity's wholly owned trading subsidiary will not be treated as a substantial donor for these purposes.
Close companies
With effect from 1 April 2006, non-close companies will be subject to the same rules as close companies relating to cash donations made where the company receives benefits in consequence of making the gift that exceed certain limits. A donation from any company, not just a close company, will not be a 'qualifying donation' and attract tax relief for that company if benefits received by that company exceed the following limits:
for donations not exceeding £100, 25% of the gift
for donations exceeding £100 but not exceeding £1,000, £25, and
for donations exceeding £1,000, 2.5% of the gift up to a maximum of £250.
Potentially repayable gifts or gifts associated with the acquisition of property (otherwise by way of gift) by the charity from the donor or a person connected with the donor will also be caught.
Non qualifying expenditure
There will now be a link between non-charitable expenditure incurred by a charity and loss of tax relief, in that tax relief will be restricted by £1 for every £1 of non-charitable expenditure in accounting periods commencing on or after 22 March 2006.
Trading
New provisions have been brought in to cover trade by a charity that is partly a primary purpose trade and partly non primary purpose trading. Previously, by concession, HM Revenue & Customs treated the different elements of the trade as separate trades. The new rules introduced with effect from financial periods commencing on or after 22 March 2006 enact this concession.
Gift Aid Relief for companies wholly owned by one or more charities
With effect from 1 April 2006, companies wholly owned by one or more charities will be able to make gift aid payments to those charities and obtain tax relief for the donation using company gift aid without such payments being regarded as distributions for company gift aid purposes.
Charity Commission
Updates to the website
March 2006
Guidance on the Extended Schools Initiative and the provision of pre-school childcare – this clarifies the circumstances in which those responsible for a school can provide pre-school facilities and what happens when an existing charitable pre-school association already operates at the school.
RS11 – Cause for Complaint? How charities manage complaints about their services.
This report presents the findings of the Charity Commission's research into charities' working practices and contains ideas that the Commission suggests charities may wish to consider adopting, taking into account each charity's own unique situation.
April 2006
Streamlined removals from the Register
New public guidance for removing medium sized charities from the Register has been published. "Dissolution, winding up and removal from the Register for medium sized charities" (CSD 1077A) is accompanied by the related Declaration Form (CSD 1077). The related operational guidance OG17 – Removals of organisations from the Register has also been released.
Welsh Language Scheme
Guidance published on how the Charity Commission will treat the English and Welsh languages on a basis of equality and how the Commission will give effect to that principle when providing services to the public in Wales.
May 2006
Charity Commission Corporate Plan 2006 – 2008
The Commission published its new strategy in 2005 – this document sets out detailed implementation plans for the next two years.
CC30 – Finding New Trustees – What charities need to know
This publication was issued in May 2006.
News
14 March 2006: the Charity Commission asks financial specialists to stop requesting certificates proving their clients are registered charities in order to continue to claim Stamp Duty Reserve Tax exemption. Instead they are being told to visit the Commission's online register of all registered charities in England and Wales on the Commission's website.
21 March 2006: the Charity Commission announce first full charity public service delivery survey, the most comprehensive survey of its kind.
15 May 2006: the Charity Commission challenged charities to improve their track record for financial accountability, highlighting the fact that over one in ten of top charities fail to file their accounts on time, and a quarter of all charities failed to submit their accounts and annual returns within the statutory ten month deadline in 2005.
16 May 2006: the Charity Commission launched Charity Commission Direct - the charity regulator's co-ordinated one-stop shop for charity enquiries. This service, based in Liverpool, is the culmination of the change of focus and direction delivered by the Commission's strategic review.
All new enquiries to the Commission via any channel, whether by phone, email, post or fax, will come directly to a single point - Charity Commission Direct. Each enquiry will be risk assessed and priority requests immediately escalated.
24 May 2006: new research announced by the Charity Commission revealed that just over two thirds of charities don't have complaints procedures in place. This gap leaves many charities with no formal way to discover whether users are unhappy with their services. A worrying 80% of charities without such procedures said they didn't need one.
Many charity users are among the most disadvantaged groups in communities and the Commission highlighted the importance of having an accessible, clear complaints procedure to ensure their views are heard. The Commission warns those without complaints procedures that they are failing to fully account to their service users. Such charities also miss valuable opportunities to learn from complaints to improve their services.
24 May 2006: the Charity Commission highlighted a seminar held in Cardiff, where it joined forces with faith-based charities to discuss charity effectiveness in minority faith communities. The event brought together leaders from Muslim, Jewish, Sikh, Buddhist and Hindu charities and aimed to tackle issues affecting their work, and consider how better regulation might support and enhance their performance.
The event was part of a wider Charity Commission consultation aimed at deepening its knowledge of the issues facing faith based charities, helping to support this vibrant part of the charity sector and ensuring that public trust and confidence in these groups is maintained.
HM Revenue & Customs
6 March 2006: HMRC Charities have restructured the Charities and Donors guidance section of their website with a number of enhancements to make it easier to use.
28 April 2006: HMRC Charities released details of a pilot exercise to handle charity compliance differently. The exercise will be looking at better ways of conducting compliance enquiries over the next six months, to help improve efficiency and reduce the costs of compliance for charities and their subsidiary companies. It will explore different ways of working such as handling minor queries by telephone or, carrying out 'real time' reviews of direct and indirect tax (VAT) issues rather than enquiries based on return entries relating to past events.
11 May 2006: with effect from 26th April 2006 the Office of the Scottish Charity Regulator assumed responsibility for the registration and regulation of charities in Scotland. HMRC Charities will continue to be responsible for the administration of charity tax reliefs for charities and donors throughout the United Kingdom
HM Treasury
News
31 March 2006: the Chancellor of the Exchequer, Gordon Brown, set out details of the new office of Charity and Third Sector Finance, to be based in the Treasury.
The new office will advise faith and non-faith charities and third sector organisations on gift aid. It will also act as a policy and strategy network in HM Treasury bringing together all aspects of spending, financial services and tax policy relating to the third sector, including charities, voluntary and community groups, social enterprises, co-operatives and mutuals.
15 May 2006: the policy review on the future role of the third sector in social and economic regeneration was launched at an event attended by 150 policy makers, who used the opportunity for a wide-ranging discussion and debate covering a number of key third sector issues.
Publications
May: Guide to Government Assistance to the Third Sector
This guide sets out the principal sources of Government financial support available to the Third Sector.
May: Improving financial relationships with the third sector: Guidance to funders and purchasers
The guidance is intended to help government departments, non-departmental public bodies (NDPBs), other funding bodies themselves distributing public money to the third sector. It will also be of interest to the third sector, who as recipients of funding, can be able to better understand the considerations that funding bodies need to bear in mind during the funding process.
Home Office
News
28 March 2006: the Home Office launched a new £5 million flagship programme for volunteering, mentoring and befriending projects for 2006/7 and 2007/8.
Up to 50 projects funded through the GoldStar programme will act as exemplars of good practice in recruiting, managing and retaining volunteers, mentors and befrienders. They will use at least one third of their grants in spreading good practice throughout the sector, while using the rest to maintain and develop their operations, The operations will focus on raising the level of volunteering activity amongst people at risk of social exclusion.
9 May 2006: a new charity, v, created to revolutionise youth volunteering was unveiled 8 May 2006 with a premiere-style film event in London's Leicester Square.
The charity, aims to inspire and engage 1 million new volunteers between the ages of 16–25 years.
The establishment of v was the major recommendation of the Russell Commission, set up in May 2004 by the then Home Secretary, David Blunkett, and the Chancellor of the Exchequer, Gordon Brown. The Russell Commission's aim was to develop a new national framework for youth action and engagement, as part of the government's commitment to increase youth volunteering and civic service.
The new charity has the task of identifying and securing private sector support, both financial and in-kind. The government has made £50m available to match funding raised from the private sector.
National Council for Voluntary Organisations
News
22 March 2006: as the House of Lords Committee Stage debate on the National Lottery bill drew to a close, the National Council for Voluntary Organisations (NCVO) welcomed an important achievement in its campaign to secure a commitment to future funding for the voluntary and community sector (VCS). The government made a statement placing on record that it would act as guarantor of the Big Lottery Fund's undertaking that 60–70% of its funding will go to the VCS, ensuring that it delivers on this undertaking and reports in a transparent and accessible way.
7 April 2006: a group of leading charity chief executives sent a joint letter to the Home Secretary, Charles Clarke MP. The letter, signed by the heads of British Red Cross, Citizens Advice, Help the Aged, Leonard Cheshire, RNID and NCVO - six key players in the Coalition for a Charities Act - outlined concerns over the Charities Bill, as it is currently drafted, in relation to the legal basis of the public benefit test for charities that charge high fees.
It was stated that charities have long recognised the need to update charity law, and have pressed for this important legislation. The Charities Bill must protect and promote the charity "brand", by making it clear that only those organisations that benefit the public can be charities. However, there are concerns that the proposed public benefit test is not sufficiently robust for the Bill to have the impact that it should, particularly where charities charge high fees for their services.
18 May 2006: it was announced in the Financial Times that five charities, including, NCVO, have made the top 50 Best Places to work in the UK. Organised by the Great Places to Work Institute UK and The Financial Times, the competition highlights and celebrates employment best practice.
Publications
Voluntary Agencies Directory 2006
The 25th edition of the Voluntary Agencies Directory is the established reference guide for journalists, job-seekers, researcher, policy makers, politicians and individuals involved in the voluntary sector. Organised into a user-friendly A-Z format, the directory lists over 2000 national charities and other organisations connected to the voluntary sector.
Law Commission
Trustee exemption clauses
Work on the Commission's projects concerning Trustee exemption clauses continues – the team anticipate publishing a final report setting out recommendations to Government in July 2006.
Capital and income in trusts: classification and apportionment
The team have received 40 responses to the consultation paper published in July 2004. Publication of a report and draft Bill are dependant on the team's work on trustee exemption clauses.
The rights of creditors against trustees and trust funds
This project will examine the rules governing the liability of trustees and trust funds when trustees enter into contracts. The project will commence when the Commission's current trust projects (referred to above) have been completed, which is expected to be no later than 2006.
Renting homes
On 5 May 2006 the Law Commission published 'Renting Homes: The Final Report', which is the summation of its project to modernise and simplify the law on housing tenure. Further details of the paper are available on their website,
http://www.lawcom.gov.uk/ renting_homes.htm
Institute of Fundraising
News
3 March 2006: the Institute invited contributions to the development of new Codes of Fundraising Practice on Event Fundraising and Face to Face Fundraising. The codes were available on the Institute's website and the consultation period ended on 7 May 2006.
3 March and 10 March 2006: the Institute warns charities about changes that may affect changes to credit and debit card donations will impact on charities – from April 2006 the three digit security code on the back of Visa and Mastercard cards will be required when accepting donations from cardholders that are not present. Failure to collect the code may result in the acquiring bank's refusal to process donations. In addition, the requirement to destroy the security code after the transaction has completed will affect charities who collect card details on Gift Aid declaration forms, which need to be kept for the purposes of Gift Aid audits. The Institute called on Visa and Mastercard to clarify how these changes will affect charities.
22 March 2006: the Institute welcomed changes introduced in the Budget 2006 that are intended to limit abuses of charitable tax reliefs, as well as the establishment of a new Office of Charity and Third Sector Finance in HM Treasury.
30 March 2006: The Institute of Fundraising and EAPG announced a strategic partnership at the Institute's Major Gift Fundraising Conference in London. The partnership will see both organisations utilising their respective networks and stakeholder support to develop planned giving and major philanthropy across the UK and into Europe.
10 May 2006: the Institute announced the launch of a new programme of tax effective giving training workshops for charities across England from 2006-2007. The workshops are designed to support charities in England that are looking to maximise their income through Gift Aid, Share Giving, Payroll Giving and Legacies.
18 May 2006: New research released by Remember A Charity, a consortium of 140 charities that works to increase legacy income to UK charities, revealed record awareness of charitable legacies amongst the target audience following Remember A Charity's recent ad campaign.
30 May 2006: the Institute announced the short listed nominations to the Fundraising Awards 2006, which will be held on 10 July 2006.
Case Law
Newnham College, Cambridge University v Revenue & Customs Commissioners
[2006] EWCA Civ 285
The power to allow a right of option to taxation conferred by Sixth Council Directive 77/388 Art 13C(a) was a power only exercisable in cases of letting or leasing of immovable property and the provisions of the Value Added Tax Act 1994 Sch 10, which were enacted pursuant to that power, had to be interpreted with that in mind. The meaning to be given to occupy and occupation in Sch 10 required more than a right to use the land and required some degree of control over what others who were not also in occupation could do on the land. The case concerned land on which Newnham College proposed to rebuild and refurbish its library.
Southampton University v Revenue & Customs Commissioners
[2006] EWHC 528 (Ch)
Publicly funded research was in the circumstances a separate economic activity or business from a university's other activities so that VAT on goods and services used exclusively for such research was not deductible or recoverable and VAT on goods and services used partly for that research and partly for business purposes fell to be apportioned under the Value Added Tax Act 1994 section 24(5). Whether or not a particular activity was or was not carried out as part of a university's overall business for VAT purposes was a question of fact and whether or not a project was business or non-business had to be determined by the facts of the case in point on a project by project basis.
Mayflower Theatre Trust Ltd v Revenue & Customs Commissioners
[2006] EWHC 706 (Ch)
Input tax on supplies of items such as programmes, drinks, sponsorship and corporate entertainment made by a theatre trust had been directly and immediately linked with the exempt supplies of tickets to the general public. Input tax might be specifically attributable to both particular exempt and taxable supplies, allowing residual tax to be deducted by virtue of the Value Added Tax Regulations 1995 r101(2)(d), as a sufficient nexus could exist without it being necessary to show that inputs were a 'cost component' of the price charged for the relevant outputs in the very narrow sense.
St Mary & St Michael Parish Advisory Co Ltd v (1) Westminster Roman Catholic Diocese Trustee (2) Attorney-General (3) Digby John Samuels (4) Martin James Hayes
[2006] EWHC 762 (Ch)
There was nothing in a trust deed that limited the use of land within the precincts of a Roman Catholic Church to religious and educational charitable purposes within and for the sole benefit of the parish and its parishioners. The land could be used for building part of a 'Learning Village' to integrate a number of local schools on one campus.
Sheiling Trust (Ringwood Waldorf School) v Revenue & Customs Commissioners (VADT19472)
V&Dtr (London) (A Edward Sadler (Chairman), John Brown) 27/2/2006
The activity carried on by a school run by the appellant charitable trust was not a business for VAT purposes and therefore construction of a building for the school was a use solely for a relevant charitable purpose in respect of which the trust was entitled to a refund of input tax.
Noved Investment Co v Revenue & Customs Commissioners (SpC521) (2006)
Sp Comm (A N Brice, Charles Hellier) 23/2/2006
Gifts by a company to the charitable foundation that owned it were distributions in respect of shares within the meaning of the Income and Corporation Taxes Act 1998 section 209(2)(b) but were also distributions within the meaning of section 209(4) so that section 209(5) had the effect of disapplying section 209(4) and section 209(2)(b).
Journal articles
The Budget report 2006 (March)
Author Institute of Chartered Accountants of England and Wales Tax Faculty
Source Taxline 2006, 4 Supp (Budget Report 2006), 1-24 [Abbrev]
Examines the proposals in the Budget of March 22, 2006, including changes affecting: (1) tax rates and allowances; (2) personal and employment taxes; (3) tax credits; (4) business taxes; (5) charities' tax affairs; (6) inheritance tax and trusts; (7) pensions; (8) property taxes; (9) VAT; (10) stamp duty land tax; and (11) anti avoidance measures. Outlines the recommendations of the Carter Review of the Revenue and Customs online services, including the proposed changes to the self assessment filing dates.
Charitable donation or distribution? (March)
Author Maurice Parry-Wingfield (Deloitte)
Source Tax Journal Tax J. (2006) No.827 Pages 11-14
Comments on the Special Commissioners decision in Noved Investment Co v Revenue and Customs Commissioners on whether an investment company partly owned by a charity could claim tax relief as a charge on income for donations to the charity. Considers whether the donation was liable to tax as a distribution.
The luck of the draw (March)
Author Mark Smulian
Source Law Society's Gazette L.S.G. (2006) Vol.103 No.09 Pages 18-19
Explores the challenges faced by law firms in securing funding for pro bono legal advice projects. Discusses the role of law centres and local authorities in gaining funding for work, focusing on examples of specific funding sources including the Law Society Charity. Examines the range of international projects being funded by the EU and identifies the factors taken into account by funding organisations when deciding whether to finance a particular legal project
How the LawWorks project obtained its Big Funding (March)
Author Mark Smulian
Source Law Society's Gazette L.S.G. (2006) Vol.103 No.09 Page 20
Questions James Waugh, manager of pro-bono community groups project LawWorks, on how the group secured a £190,000 award from the Big Lottery Fund. Discusses the nature of the programme and outlines the work carried out by the group in gathering funding from different sources. Advises solicitors on which steps to take when looking for funding to finance a charitable project.
The sins of the fathers (March)
Author Andrew Cameron (Charles Russell LLP)
Source Trusts and Estates Law & Tax Journal T.E.L. & T.J. (2006) No.74 March Pages 16-17
Comments on the Ontario Court of Appeal decision in Re Winding Up of the Christian Brothers of Ireland in Canada (CBIC) on whether CBIC was immune from liability for compensation arising from claims of sexual abuse at one of its orphanages under the doctrine of charitable immunity and whether all CBIC's assets, including shares in two schools not involved in any claim, were eligible to pay the tort claims. Considers arguments for and against the decision.
Budget summary (March)
Source S.B.T. & F. 2006, 18(10), 129-132 [Abbrev]
Summarises the proposals of the Budget of March 22, 2006, including changes affecting: (1) the filing deadlines for tax returns; (2) the inheritance tax treatment of trusts; (3) income tax rates and personal allowances; (4) business taxation; (5) the taxation of employment benefits; (6) real estate investment trusts; (7) charities' tax affairs; (8) stamp duty land tax; (9) tax avoidance; and (10) VAT.
Statutory obligation v. moral obligation in the world of charity (March)
Author Anthony Mason
Source A.A. & L. 2006, 11(1), 101-107 [Abbrev]
Comments on the Chancery Division ruling in Attorney General v British Museum Trustees on whether the express prohibition in the British Museum Act 1963 s.3(4), on the disposal of objects in the collections of the British Museum, prevented the defendant trustees from returning drawings which had been stolen by the Gestapo in 1939 to their rightful owners. Notes whether the fact that the trustees were under a moral obligation justified a disposition in breach of s.3(4) and considers the earlier decision in Re Snowden.
The 2006 budget and charities (April)
Author Alan Thomson (Chantrey Vellacott DFK)
Source Tax Journal Tax J. (2006) No.833 Pages 7-8
Discusses measures contained in the March 2006 Budget announcement which could impact on charities including: (1) changes to rates of corporation tax, capital allowances and tax treatment of mixed trading activity; (2) restrictions on transactions with a charity's substantial donors; (3) loss of tax relief on non charitable expenditure; and (4) proposed changes to partial exemption special method approval.
The 2006 budget and charities (April)
Author Alan Thomson (Chantrey Vellacott DFK)
Source Tax Journal Tax J. (2006) No.833 Pages 7-8
Discusses measures contained in the March 2006 Budget announcement which could impact on charities including: (1) changes to rates of corporation tax, capital allowances and tax treatment of mixed trading activity; (2) restrictions on transactions with a charity's substantial donors; (3) loss of tax relief on non charitable expenditure; and (4) proposed changes to partial exemption special method approval.
Why are we here? (April)
Author Ben Davies
Source Accountancy 2006, 137(1352), 55-57 [Abbrev]
Discusses whether accountants contribute to the economic and social well being of the UK. Considers the involvement of accountants in financial management controls. Criticises current practice concerning corporate social responsibility reports. Commends the SORP 2005 on financial management by charities and FRS 17 on Retirement Benefits.
Charitable transfer (April)
Source Tax. 2006, 157(4053), 31 [Abbrev]
Reports on the Special Commissioners decision in Noved Investment Co v Revenue and Customs Commissioners on whether an investment company partly owned by a charity could deduct donations to the charity as charges on income. Examines whether the donations were distributions and fell within the scope of exemption under the Income and Corporation Taxes Act 1988 s.209(5).
Foyle's law (May)
Author Pete Miller (Ernst & Young)
Source Taxation Tax. (2006) Vol.157 No.4056 Pages 131-133
Comments on the Special Commissioners decision in Noved Investment Co v Revenue and Customs Commissioners on whether an investment company, in which a charitable foundation was the major shareholder, could claim tax relief as a charge on income for donations to the charity. Considers whether the donations were treated as a distribution and liable to tax.
Legal developments (May)
Author Douglas Cracknell
Source Publication Solicitors Journal S.J. (2006) Vol.150 No.20 Supp (Charity & Appeals Update: Spring 2006) Pages 11-13
Discusses the draft Charities Bill 2005. Considers guidance issued to charities as regards: (1) that offered by the Charity Commission on areas such as new indemnity provisions, the Extended Schools Initiative, and medium sized charities; (2) the taking of photographs in schools; (3) listed places of worship; (4) charity trading; and (5) public confidence.
Recovering costs (May)
Author Stephen Bubb (Acevo)
Source Solicitors Journal S.J. (2006) Vol.150 No.20 Supp (Charity & Appeals Update: Spring 2006) Pages 14-15
Discusses the area of full costs recovery (FCR), highlighting the role of the Association of Chief Executives of Voluntary Organisations (Acevo). Examines the legal duty of funders and problems between funders and recipients of funds. Notes the launch of Acevo's FCR campaign and the progress of the Government as regards funding in the voluntary sector.
On the board (May)
Author Pesh Framjee (Deloitte)
Source Solicitors Journal S.J. (2006) Vol.150 No.20 Supp (Charity & Appeals Update: Spring 2006) Pages 16-17
Considers the role, structure and appropriate size of boards of trustees for the charities sector.
VAT operatics (May)
Author John Crawford (VAT Consultancy)
Source Solicitors Journal S.J. (2006) Vol.150 No.20 Supp (Charity & Appeals Update: Spring 2006) Pages 18-19
Comments on the VAT and Duties Tribunal decision in Longborough Festival Opera v Revenue and Customs Commissioners on whether the profits from a theatre set up for charitable purposes were exempt from VAT, where it was established by a landowner, who was not a registered charity, on his own land with the intention of giving the profits to charity. Highlights the significance of the provisions contained in the Value Added Tax Act 1994 Sch.9 Group 13.
Employment tax (May)
Author Tim Waterhouse, Hugh Twitchen and Pesh Framjee (Deloitte)
Source Solicitors Journal S.J. (2006) Vol.150 No.20 Supp (Charity & Appeals Update: Spring 2006) Pages 22-23
Advises charities on the need to address matters relating to employment law. Considers issues such as: (1) volunteer and trustee expenses; (2) employment status; (3) home working; (4) the provision of equipment; (5) the renewal of existing provision; and (6) benefits packages.
GuideStar UK
GuideStar UK has now completed its development phase and successfully launched its free public website to the public. GuideStar UK also announced that it has secured further investment and completed a reorganisation of its management.
A million GuideStar UK charity pages have already been viewed by its website users. Over 22,000 charities have reviewed and/or augmented their own information using GuideStar UK's management system.
Public Accounts Committee
2 March 2006: on the basis of a Report from the Comptroller and Auditor General, the Committee examined the progress made by central government to improve the way it works with VSOs and the steps being taken by HM Treasury and the Home Office to build funders' capacity to work effectively with VSOs
The report found that government had failed to meet key targets to increase the voluntary sector's involvement in public services. It recommended that new targets should be set up, beyond 2006, to provide a real incentive for departments to increase their involvement in the sector.
DCMS
28 March 2006: Culture Minister, David Lammy welcomed the Budget announcement that the Listed Places of Worship and Memorials Grants schemes will now run until 2011.
The Listed Places of Worship scheme returns to faith groups the equivalent of the VAT incurred in making repairs to listed places of worship, while the Memorials scheme rebates the VAT incurred by charities and faith groups in building and maintaining memorial structures.
Charities Lottery
"Monday", the new weekly online charities lottery, was launched on Monday 8 May. It aims to benefit a rolling list of 70 named charity partners, of which five a week are chosen by players to benefit from the weekly draw. The operating company Chariot has set a minimum £500,000 income cap for benefiting charities - excluding most local charities. The organisers claim that the benefiting charities will receive 30p from every pound as unrestricted income. The first two draws have yielded disappointing levels of income in spite of initial technical difficulties being resolved. Further details of benefiting charities can be found at
http://www.chariot.org.uk/news/pressreleases/2006/may/index.html#2DfES
10 March 2006: Schools Minister Andrew Adonis announced that the Department for Education and Skills will provide £150,000 in start up funds for the creation of a national representative body for special schools. The body will be the first national organisation for the special schools sector and will be set up by the National Association of Non-Maintained and Approved Independent Special Schools and the National Association of Emotional and Behavioural Difficulty Schools.
16 March 2006: a scheme was announced to promote voluntary giving to Higher Education providers from private donors, the aim being to help generate additional income for the sector. Under the pilot project, announced by the Department for Education and Skills and Universities UK, DfES will provide up to £7.5 million to 27 higher education providers to match fund investment to increase income from private donations.
16 March 2006: The Prime Minister announced that there are currently 100 Academies open or in the pipeline – halfway to the established target of 200 Academies.
Office of the Scottish Charity Regulator (OSCR)
Publications
9 March 2006: OSCR published findings from OSCR's 2005/2006 Winter Consultation, produced by Partners in Evaluation.
4 April 2006: OSCR published guidance for charity trustees on consents and notifications under the Chariites and Trustee Investment (Scotland) Act 2005
20 April 2006: OSCR published initial guidance for charities and charity trustees on the new charity test introduced through the Charities and Trustee Investment (Scotland) Act 2005.
News
21 April 2006: OSCR highlighted new features and content on its website, as well as the website's functionality, which aims to help charities comply with the new legislation.
24 April 2006: a conference entitled 'The Future for Charities in Scotland' was held to mark the commencement of the Charities and Trustee Investment (Scotland) Act 2005.
15 May 2006: OSCR published an overview of its first month following the commencement of the Charities and Trustee Investment (Scotland) Act 2005, including Scotland's first registered charity under the new legislation, the completion of its 20,000th annual return and a move to new premises in Dundee.
24 May 2005: OSCR published a statement to clarify the current position surrounding remuneration of trustees and trustee indemnity insurance, following comments regarding the remuneration of trustees.
26 May 2006: OSCR published a summary of its conference held on 24 April 2006 concerning the future for Scottish charities.
European
The European Co-operative Society
The European Council adopted a Council Regulation and Council Directive in July 2005 dealing with a new type of cooperative, the European Co-operative Society (the SCE) which will be able to operate across the EEA on the basis of registration in one Member state (the closest national equivalent is the IPS). The EC Regulation specifies some of the key internal rules of an SCE, including rules on calling management meetings and general meetings. The EC Directive sets out requirements for the information, consultation and participation of employees in SCEs.
A consultation document on the SCE was published in March 2006, which contains further information about the SCE. Consultation closes on 8 June.
The EC Regulation is directly applicable and will come into force on 18 August 2006. The UK must adopt legislation to give proper effect to the EC Regulation, and the draft European Cooperative Society Regulations 2006 are intended to give effect to the EC Regulation. The draft European Cooperative Society Employee Involvement Regulations 2006, which implement the EC Directive, will also come into force on 18 August 2006.
