Charity compliance update August 2018
Plenty to get your teeth in to this month with the launch of the Civil Society’s strategy on building a better future and consultation updates – outcomes and the launch of The Charity Digital Code of Practice consultation. Read on to stay up to date.
Civil Society Strategy: Building a future that works for everyone
A consultation around how the government can work with and for civil society to tackle challenges and unlock opportunities to build a stronger society, now and in the future, ran until 22 May 2018. On 9 August 2018 the results were published.
- People – enabling a lifetime of contribution
- Places – empowerment and investment for local communities
- The social sector – supporting charities and social enterprises
- The private sector – promoting business, finance and tech for good
- The public sector – ensuring collaborative commissioning
“Charities and social enterprises - the social sector - are the core of civil society," the report said. "The government is keen to work alongside the social sector to build a future in which the sector can adapt and thrive, strengthen public trust, as well as find new ways to resource and deliver their work.
“The government is determined that charities and social enterprises should be fully confident in their right to speak in public debates and to have a strong role in shaping policy and speaking up on behalf of those they support.”
Salient points include:
- The DDCMS will establish a forum for social enterprises to coordinate relations with government.
- £20m to be released over the next two years from inactive charitable trusts to fund the sector.
- Government focus on encouraging collective voluntary giving.
- Working with partners to explore how best to use digital to build a stronger and even more effective social sector. Focus on addressing complex social issues, such as tackling loneliness, healthy ageing, online safety, and digital inclusion.
- Use of £55m from dormant accounts to fund a new, independent organisation which will work with partners across the private and social sectors to tackle financial exclusion.
- Support of the spread of Citizen Commissioners - local people supported to make commissioning decisions on behalf of their local communities.
Consultation outcomes since our last update
Non-charitable connections - CCEW
On 8 August 2018 the Charity Commission for England and Wales (CCEW) published the outcome of its ‘Charities that are connected with non-charitable organisations: maintaining your charity’s separation and independence’ consultation. This consultation closed on 15 May 2018 and attracted 57 responses.
The CCEW are expected to publish full guidance for charities in late 2018. Prior to this the CCEW said that it will run some further limited engagement to test their approach to development of the final guidance. If you or your organisation would like to be involved with this you can email CCEW using the subject heading or reference ‘Further engagement/charities connected with non-charitable organisations’.
“Ultimately this is about protecting what charity is,” said Nick Mott of the CCEW. “Our role is to represent the public interest to charities, and these issues go to the very heart of public trust.
“Because this is so important, it’s not easy. But I am positive that this feedback will help us strike the right balance, and that users will see the value in asking sometimes difficult questions and weighing up what they do against these principles.
“We want to empower trustees to make decisions that promote their charity’s best interests. I know and trust that this is a goal shared across the sector.”
Industry insightsView more
Depreciation and capital allowances review - Office of Tax Simplification (OTS)
On 6 August 2018 the OTS published the outcome of its review of depreciation and capital allowances. The review considered whether the use of accounts depreciation to provide relief for capital expenditure instead of capital allowances would simplify the preparation of tax returns for incorporated and unincorporated business.
The OTS has produced a report called “Accounting depreciation or capital allowances? Simplifying tax relief for tangible fixed assets”.
It focuses on demonstrating how replacing capital allowances with depreciation could be done but the recommendation is that depreciation should not replace capital allowances and no further work should be done pursuing it, at this time.
Further recommendations were made in the meantime, around the potential simplification of capital allowances.
Any changes to the rules could potentially be far-reaching and would certainly impact on taxable (and therefore distributable) profits in trading subsidiaries of charitable organisations – the main purpose of which is typically to provide a source of Gift Aided income each year. It will be interesting to see whether anything further comes of this.
OSCR’s annual review 2017-18
OSCR published its annual review on 31 July 2018, which can be found here. Key highlights include:
- assessing 1,184 applications for charitable status, of which 961 were successful (13% increase on the previous year)
- 11,275 downloads of OSCR’s charity registration logo
- handling 506 concerns about charities from external sources, and
- producing 10 new guidance publications.
- Charities that don't provide public benefit.
OSCR’s Chief Executive David Robb welcomed the new publication. “OSCR has had a very productive year. Being the registrar and regulator for over 24,000 Scottish charities is a challenging task, but it is a rewarding one.
“Across the year we have seen evidence of dedicated, selfless work by tens of thousands of charity trustees across Scotland. It is their commitment to delivering inspirational charitable work that lies at the core of this wonderful sector, and we feel privileged to be able to support them.”
Consultations open or pending a response
Here’s our monthly round-up of (and links to) key consultation opportunities and those closed, pending feedback.
The following consultations are currently open and inviting a response:
Charity Digital Code: The Charity Digital Code of Practice – Consultation opened 3 July 2018 and runs until 9am on 25 September 2018. Seeking feedback to ensure that the code supports the charity sector in using digital effectively. Have your say via:
The following consultations are closed with feedback analysis pending – watch this space for an update in future briefings:
Charity Tax Commission (CTC): The CTC called for a review of charitable tax reliefs, with the last comprehensive review being conducted some 20 years ago.
The CTC said that they were “keen to receive thoughts about the effectiveness of current reliefs….and whether the existing system could be improved in order for charities to better serve their beneficiaries.”
The Commission is currently collating responses following the deadline passing on 6 July 2018.
Charity Commission for England and Wales (CCEW): The use and promotion of complementary and alternative medicine (CAM): making decisions about charitable status – closed on 19 May 2017.
This consultation is about the Commission’s approach to deciding whether an organisation which uses or promotes CAM therapies is a charity.
Charity Commission for Northern Ireland (CCNI): Annual monitoring return 2018 – closed on 21 November 2017.
Changes to apply to charities’ financial years starting on or after 1 January 2018. A full consultation report was due in Spring 2018 but has not yet been published.
CCEW and OSCR – Charities SORP: A consultation was launched on 20 February 2018 (which ran until 4 April 2018) focusing on 21 proposed amendments to the SORP which were considered necessary because of the changes made in December 2017 to FRS 102.
CCEW, OSCR and the CCNI have circulated an invitation to tender for the printing and production of SORP 2018, bids for which must be in by 24 August. Presumably there will be further news once this date has passed.
OSCR: Consultation on disclosure regime - proposals to simplify and modernise the Protecting Vulnerable Groups (PVG) scheme. The full consultation document, can be found here. Closure was 18 July 2018.
Jen is a Fellow of the Association of Chartered Certified Accountants (FCCA) and the founder and managing director of Gerrard Financial Consulting, a specialist accounting firm for the charitable sector. She has over 17 years’ experience working in accounting and finance and has also worked as an accountancy tutor for a leading training...