Charities Newsletter – November 2018

Our Charities team here at Blake Morgan publishes e-bulletins to keep you up-to-date with breaking news and topical issues affecting the sector. We also offer regular charity trustee induction and refresher training sessions.

Charity Commission warns of continued underreporting as it publishes findings of its interim safeguarding taskforce

On 17 October the Charity Commission published the findings of its interim safeguarding taskforce. In its analysis of the safeguarding reports received between 1 February and 31 May 2018 (1228 in total) the Charity Commission found that:

• The top 5 types of charity that submitted reports during that time were: overseas aid/ famine relief (29%), disability (12%), religious activities (12%), education /training (12%) and younger people (11%);
• The majority of reports related to incidents of or concerns about potential harm to individuals, including but not limited to sexual abuse or harassment; and
• In cases where an individual was identified as having allegedly been harmed, 47.5% related to a child, and 32% related to an adult (in the remainder the age of the individual could not be identified from the initial report).

The Commission’s report also found that, despite recent increases in serious incident reporting, there is significant and systemic underreporting of incidents by charities working at home and abroad and the report produced the following conclusions:

• only 1.5% of registered charities have submitted any kind of serious incident report since 2014;
• only 0.9% of charities have reported a safeguarding incident since 2014; and
• that there may be certain groups of charities in which under-reporting is especially prevalent.

You can read the Commission’s full press release here and the final report here.

Charity Commission updates guidance notes on serious incident reporting, reporting serious wrongdoing and safeguarding

Following the publication of the Charity commission’s report (as discussed above) the Charity Commission have published updated guidance notes including:

• Updates to their guidance on how to report a serious incident in your charity;
• A new guidance note on how to report serious wrongdoing at a charity as a worker or volunteer; and
• Updates to their guidance on safeguarding and protecting people for charities and trustees adding information on protecting staff and volunteers in a charity, working with children and adults at risk and working overseas.

Charity Commission have published their new Statement of Strategic Intent (2018-2023)

On 4 October 2018 the Charity Commission published their new Statement of Strategic Intent setting out their aims for the next five years, including their new core purpose.

The new core purpose is “to ensure charity can thrive and inspire trust so that people can improve lives and strengthen society, will inform everything we [the Commission] do“. Following on from this the Commission has set its five new strategic objectives. These are to:

• Hold charities to account.
• Deal with wrongdoing and harm.
• Inform public choice.
• Give charities the understanding and tools they need to succeed.
• Keep charity relevant for today’s world.

The Chair of the Commission, Baroness Stowell, announced further details in her speech on 5 October.

You can read the full Statement of Strategic intent here.

Charity Commission announces changes to charity register updating service

From 12 November 2018, all registered charities will be required to check and update their details on the register of charities when they log in to the online update charity details service or to access their annual return. The system will highlight any missing information that a charity must provide before they can access their annual return.

The Charity Commission has advised Charities to have this information to hand before they access the system and has published a guide explaining what information is required which you can access here.

Charity Commission responds to draft Charity Code of Ethics

On 1 October 2018 the Charity Commission responded to National Council for Voluntary Organisations’ consultation on its draft Charity Code of Ethics. The Commission was largely positive in its response highlighting the importance of charities following the ethical principles and showing those key values whenever working due to the public holding charities to high standards. Their full response can be read here.

ACCOUNTING AND TAX UPDATE:

• Launch of Making Tax Digital (MTD) project delayed by HMRC for Charity Trusts until October 2019
  • On 16 October 2018, HMRC updated its Making Tax Digital guidance. The updated guidance postpones the mandatory implementation date of digital tax compliance for VAT for certain complex businesses until October 2019. The definition of complex business includes Trusts and non-corporate not-for-profit organisations and will, when in force, affect a variety of Charitable organisations, and in particular, Charitable Trusts.

• Plans for joint Charity Commission and HMRC registration portal scrapped
  • HMRC has announced that plans to develop a joint portal for the registration of charities with HMRC and the Charity Commission, announced in 2013, will no longer be taken forward.

• Changes made to charities Statement of Recommended Practice for accounting and reporting by charities (“SORP”)
  • The three charity regulators for England and Wales, Northern Ireland, and Scotland have published an update bulletin amending SORP.

• Increases to charities’ small trading exemption limits
  • This measure was announced on 29 October as part of the Budget 2018. The measure will increase the small trading tax exemption limits for charities that apply to trading that does not relate to a charity’s primary purpose. The changes will come into effect from the start of April 2019.
  • Further details of this measure can be found here.

The UK’s first Charity Digital Code of Practice is due to launch on 15 November 2018

Sponsored by Lloyds Banking Group and the Co-op Foundation, the aim of the Code is to make digital engagement more accessible to charities of all sizes, helping them develop their skills and increase their take up of digital activity. It will also aim to make charities more accessible for beneficiaries, as well as to create new opportunities for funders to engage with digital, and enhance collaboration across the sector.

The Code was first announced in March and its development has included a consultation process (from July-September) involving over 100 charities of which 79% are intending to adopt the code on its full release.

The Code is intended to be voluntary and access to the resources is currently free of charge. You can read more on the Code’s website here.

FCA to extend access to the Financial Ombudsman Service to more than 210,000 SMEs including many Charities

On 16 October 2018, the FCA published a policy statement on small and medium-sized enterprise (SME) access to the Financial Ombudsman Service (FOS). The new policy statement is likely to affect owners and managers of SMEs, charities and trusts, as well as providers of financial services and business support to them.

The key change is a more relaxed approach to its proposed eligibility criteria for SMEs so that an organisation will only have to meet the turnover test (less than £6.5m a year) and one of either the headcount (fewer than 50 employees) or balance sheet total tests (annual balances less than £5m). This is likely to mean around 210,000 additional SMEs will have access to the FOS.

The changes are intended to come into force on 1 April 2019.

PROPERTY: Land registry updates guidance on charitable incorporated organisation (CIO) conversions and mergers

On 8 October 2018, the Land Registry (LR) published an updated version of its Practice Guide 14A (PG 14A) on charitable incorporated organisations (CIOs). Significant changes have been made to Section 8, on converting into a CIO, and Section 9, on amalgamation (merger) of CIOs.