Charities The Survival Kit

Charities The Survival Kit Tuesday 9th November 2004 The Lifeboat College RNLI Headquarters, Poole Dorset Charity Commission Draft Charities Bill Kenneth Dibble Director of Legal Services Background • Strategy Unit review • Government Proposals for a Charities Bill a Reforming the legal framework b Building trust and confidence c Ensuring independent, open and proportionate regulation Charitable status Charitable purposes (Cl.2) • Purposes – 12 descriptions of purposes • minor extensions of common law in respect of poverty, sport and community development, animal welfare. Further definitions for health; citizenship and community development; amateur sport; relief in need. • 12th purpose - residual category and provides for development of law by analogy. – Common law interpretation of terms • Public benefit Public benefit test (Cl.3) • Removal of the presumption • Common law definition remains – width of beneficiary class; indirect public benefit; private benefit • Future development of the law – legal basis for development – current „anomalies‟ • poor relations/employees • independent schools Commission approach to removal of presumption • At registration – positive assurance of public benefit – proportionate approach • Public character checks – – – – regulatory study (fee charging institutions) development of sector/sub-sector norms norms - best practice or legal requirement? compliance with norms Legal measures to facilitate mergers & administrative running of Charities (1) • Changes to cy pres rules (Cls 12 & 15) – occasion: spirit of gift and prevailing social economic circumstances – schemes: cy pres and need to secure social and economic impact. Ring fencing of transferred property • Mergers (Cl. 34) – public register of charity mergers – consequences: • (1) declaration and automatic vesting • (2) automatic transfer of legacies Legal measures (2) • Power of charities with endowments to spend capital(Cl.33) – smaller charities < £1000 income unless < £10,000 p/e if purposes can be carried out more effectively – larger charities - with Commission consent if gift by will or grant if within spirit of original gift – special trusts • Power to transfer property of unincorporated charities(Cl. 30) • Power to replace purposes of unincorporated charities (Cl.31) • Power to modify powers or procedures for unincorporated charities (Cl. 32) • Commission power to consent to changes in M&AA of charitable companies (Cl. 24) Charitable Incorporated Organisation (3) • New legal entity, corporate structure, liability of members may be limited, minimum 1 member, minimum 1 trustee, Commission sole jurisdiction • CIO becomes incorporated on registration with Commission as a charity • Powers of CIO • Duties of charity trustees and members • Relations with third parties • Conversion procedure for charitable companies and IPSs • Transfer procedure for unincorporated charities • Amalgamation and transfer procedure for CIOs • Dissolution (Cl 26, Schedule 6) Promotion trust and confidence • Duty of Auditors / Independent examiners to report matters to Commission (Cl 23) • Residual trustee power to pay trustees for goods and services (Cls 27 & 28) (Not for services as trustee or employee) • Power of Commission to relieve trustees from breach of duty (Cl 29) Relief from breach of duty Subject to criteria including managing conflicts of interest Wholly or partly if acted honestly and reasonably and ought fairly to be excused • Reconstituted Commission as a corporate body (Cls 4 & 5) • Four regulatory objectives directed at charities – increase public confidence – increase compliance with legal obligations – encourage social and economic impact – enhance accountability • Five general functions – determining charitable status – encouraging / facilitating better charity administration – identifying, investigating and remedying abuse – obtaining, evaluating and disseminating information – giving information, advice, proposals to Ministers Ensuring Independent Open And Proportionate Regulation (1) Registration - Regulation (2) • Not required if (Cl 7) – income < £5000 excepted by Commission or SoS if income < £100,000 • Voluntary registration • Position of Exempt Charities (Cls 9 - 11, Schedule 5) – concept of principal regulator – increased regulation by Commission generally and at request of principal regulator Commission powers - Regulation (3) • To give advice and guidance (Cl 20) – in furtherance of function to encourage / facilitate better charity administration – to charities generally, charity or class of charity – given in form or manner as considered appropriate • To enter premises to secure, inspect take possession of documents including e storage facility (Cl 21) – with magistrates warrant – if inquiry and concern documents would not be provided or tampered with, removed or destroyed Commission powers - Regulation (4) • To give direction to protect charity (Cl 16) – inquiry based, temporary and protective power – to trustees, offices and employees – where expedient to secure the proper administration of the charity – may be outside powers but not expressly prohibited or inconsistent with purposes • To direct application of charitable property (Cl 17) – to secure its proper application, non inquiry based – directed at persons holding / controlling charity property who are unwilling to apply it – may be outside powers but not expressly prohibited Charity Appeal Tribunal (1) (Cl. 6 & Schedules 3&4) • New appellate court of first instance • Jurisdiction to consider Commission decisions afresh and hear new evidence • Commission respondent • AG may intervene at his request or tribunal invitation • Lord Chancellor to make rules governing appeals • Appeal to court on a point of law Charity Appeal Tribunal (2) • Constitution – president, legal and ordinary members • Appeals – all decisions / orders currently subject to statutory appeals – additionally • S8 inquiry power on jurisdiction only • direction to change charity name • waiver of disqualification from trusteeship • new powers of direction and application of property • new power to order repayment of remuneration Charity Appeal Tribunal (3) • Class of applicant – varies - AG, charity, institution, trustees, persons controlling and managing, persons affected • Decision of tribunal – varies - dismiss, quash, substitute for decision another decision Commission could have made, refer matter back to Commission Scrutiny Process • Scrutiny Committee of Lords & Commons appointed in May 2004 • Evidence taken from 9 June to end July • Particular concerns - impact on small charities, application of the public benefit test, tribunal, CIO v CIC, how to measure public confidence and success of legislation • Scrutiny Report to Ministers September 2004 • 54 recommendations under consideration. Government response by end November • Queens speech for next Parliamentary session(?) Useful links Scrutiny Committee Report: www.publications.parliament.uk/pa/jt/jtchar.htm Draft Charities Bill : www.homeoffice.gov.uk/comrace/active/charit ylaw/index.html Charity Commission Draft Charities Bill Kenneth Dibble Director of Legal Services VAT & Charities Robert Warne VAT Consultant – Princecroft Redman LLP Charity Advertising • 1st April 2000 • All advertising • Services of design or production of an advertisement • Use of any medium Charity Advertising • • • • 1st April 2000 Lapel stickers Receptacles for collecting money Pre printed letters appealing for money with the envelopes • Collecting envelopes • Reply envelopes Zero Rated Building Works • Supply to a Charity for the purpose of facilitating a disabled person‟s entry to or movement within any building • Constructing ramps • Widening doorways or passages • Services and goods Zero Rated Building works • Providing, extending or adapting bathrooms, washrooms, lavatories for use by disabled persons • In residential home or self contained living accommodation • In a day centre where at least 20% people are handicapped • Building for a charitable purpose • Lifts • Permanent or temporary residence or day centre for disabled persons Affinity Cards • 20% standard rated – Introductory fee • 80% outside the scope – Introductory fee • 100% outside the scope – Later payments based on use BAA – Institute of Directors • 100% Exempt • Making Arrangements Fundraising Event • Exempt • 15 events – All income • More than 2 nights accommodation – Taxable (TOMS) • Marathon Places bought from third parties • A stipulated minimum amount of money needed before participation – Taxable Membership Fees • Treat all as Outside the Scope • Concession split between the elements • Zero Rated and Standard Rated must be identified VAT & Charities Robert Warne VAT Consultant – Princecroft Redman LLP Current Legal Issues Paul Longland Partner – Steele Raymond Topics 1. 2. Employment Trading Matters 3. 4. Liabilities for Individuals International Aspects & Conclusion Part I: Employment 1.1 General – Application of Employment Law – Determination of status – Examples of applicable legislation • The Working Time Regulations 1998 • Employment Rights Act 1996 & Employment Relations Act 1999 • Health & Safety at Work Act 1974 • Anti-Discrimination Legislation Part I: Employment 1.2 Volunteer Workers – Potential pitfalls • Authority & ability to bind charity • Injury damage to workers, charity or 3rd party • National Minimum Wage Act 1998 Part I: Employment 1.3 Disciplining Employees from 1st Oct 04 – The 3 Step Procedure (Employers perspective) • The written statement • The hearing • The appeal meeting Topics 1. 2. Employment Trading Matters 3. 4. Liabilities for Individuals International Aspects & Conclusion Part 2: Trading Matters 2.1 General – Charities Bill – no substantial reform – Trading Subsidiaries – Collaboration/Commercial Participators/Sponsors – Fundraising/Financial Issues Part 2: Trading Matters 2.2 Intellectual Property Rights (“IPRs”) – Forms of IPRs • • • • • • Copyright Performance / Artists Rights Patents Designs Trade Marks Database Rights – Protection, exploitation & enforcement of Charities IPRs – Passing off Part 2: Trading Matters 2.3 E-Commerce, Data Protection & Law of Confidence – Privacy & Electronic Communications – Data Protection Principles & Issues – Law of Confidence Topics 1. 2. Employment Trading Matters 3. 4. Liabilities for Individuals International Aspects & Conclusion Part 3: Liabilities for Individuals 3.1 Vicarious Liability – Legal Principle – Statutory Enhancement 3.2 Liability of directors, trustees,governors – General duties & case update Part 4: International Aspects & Conclusion Useful links General Guidance: www.charity-commission.gov.uk Employment matters: www.dti.gov.uk Company matters: www.companieshouse.gov.uk Data Protection & Notification: wwwinformationcommissioner.gov.uk Domain Name Dispute: www.nic.uk www.icann.org Current Legal Issues Paul Longland Partner – Steele Raymond Questions? Charities The Survival Kit Tuesday 9th November 2004 The Lifeboat College RNLI Headquarters, Poole Dorset