Charities & Not for Profit Newsletter - August 2015

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Charities & Not for Profit Newsletter August 2015

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Window of opportunity for sports clubs that no longer satisfy the rules HMRC has updated its guidance following the introduction of new rules for sports clubs which came into effect in April 2015.

HMRC has updated its guidance following the introduction of new rules for sports clubs which came into effect in April 2015.

Since 1 April 2015, the rules allowing a club to claim Community Amateur Sports Club (CASC) status, and so benefit from the special tax exemptions which go with it, have been tightened.

CASCs came into being in 2002. The intention was to reduce the administrative and tax burdens on sports clubs and to encourage participation generally. Sports clubs that are registered with HMRC as CASCs benefit from considerable tax advantages through exemptions and reliefs, similar to those applying to charities, but without the need to involve the Charity Commissioners.

The original rules were amended substantially by s46 and Sch 21, FA 2013 which also gave the Treasury power to make regulations specifying the detailed limits to be applied for the purposes of the new definitions a club had to meet in order to continue to qualify as a CASC. The regulations have since been supplemented by HMRC guidance, see Community Amateur Sports Clubs: detailed guidance notes.

Where a club is no longer entitled to be registered as a CASC, HMRC may terminate the club’s registration.

HMRC may choose the date for deregistration and

must notify the club accordingly of the decision. In practice HMRC will write to the secretary of the club.

There’s no other provision for a club to be removed from the CASC register. A club can’t simply ask to be removed.

When a registered CASC is deregistered by HMRC a charge to corporation tax may arise in respect of the club’s property. This is because the CASC rules deem the club to have disposed of its property and reacquired it at market value on the date of deregistration. There’s no tax exemption available for any chargeable gain that arises.

However, HMRC has been writing to the clubs affected saying that provided they deregister before 1 April 2016, there will be no tax charge on the deemed disposal of the property. It has now also updated its guidance in Chapter 6 of the Community Amateur Sports Clubs: detailed guidance notes.

The guidance has been revised as follows: ‘6.1.8 CASCs that have always been fully compliant with the rules prior to 1 April 2015 will be given 12 months from the 1 April 2015 to meet the requirements of the new rules. If any of these CASCs are still unable to meet the new conditions after this time they will be deregistered with effect from 1 April 2016.’

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Gift Aid Simplification – Have your say!

The Gift Aid donor benefit rules are under review and HM Treasury published a call for evidence on 16 July. This can be found here.

The call for evidence invites verification of how the current rules are understood and applied, what – if any – barriers and problems they present for the charities sector, and how they might be improved, all with an eye to simplifying the rules.

The Charity Tax Group is putting together a response and would like members to comment on any experiences or concerns related to the donor benefit rules.

There are 25 questions in the call for evidence, so they are not listed here!

However if this is something that you wish to take part in and you have any responses, we would be happy to pass these on to CTG.

To give you a flavour, here are a few of the questions being posed: Q1. Are you familiar with the current rules relating to donor benefits, and do you find the guidance easy to follow and easy to access?

Q2. Are there any specific aspects of the current rules that are unclear? If so, which?

Q3. Do you provide benefits to donors? If so, what benefits do you provide? Please provide specific details.

Q8. Do you provide non-financial benefits, i.e. benefits that cannot easily be attributed a monetary or market value, such as priority booking facilities? If so, please provide details on the types of non-financial benefits you provide and how you ensure that these are permitted within the context of the current donor benefit rules.

Q15. What benefits does a member receive that general donors do not receive?

Q24. Is the 10% rule on standard admission tickets easy to operate and explain to donors, and is it an effective tool for incentivising donations? Please provide specific details to justify your response.

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Fundraising There has been a lot of discussion in the press and on television recently regarding fundraising practices.

The debate started following allegations that a poppy seller had committed suicide after being inundated by fundraising requests. Later reports suggested that this may at most only have been one contributory factor amongst others.

Both the Institute of Fundraising (IoF) and the Fundraising Standards Board (FSB) launched investigations and reviews of their guidance and Sir Stuart Etherington (Chair of the National Council for Voluntary Organisations (NCVO)) will chair an urgent review of fundraising in England & Wales. His review will look at direct mail, telephone, doorstep and textile collections, the relationship between fundraisers and the public and the role of thirdparty fundraisers.

In Scotland, the Scottish Government has called on the Scottish Council for Voluntary Organisations to conduct its own informal review into fundraising practices across Scotland.

The Cabinet Office announced that new rules would be introduced in the Charities (Protection and Social Investment) Bill, which we have covered in earlier issues. This Bill has gone through two readings so far and will be read for a third time in the House of Lords in September. During the previous readings however, amendments were made to the original Bill with a view to protecting the vulnerable from “aggressive fundraisers and rogue charities”.

Points of interest •

Charities and Fundraisers must have a written agreement to detail how vulnerable people are protected (no ethical policy is required at the moment).

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Large charities (those with income over £1,000,000) should reveal their fundraising methods in order to substantiate their adherence to current regulations. This will need

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to be disclosed in the Trustees’ Report and will need to include statements about the following: a) The approach taken by the charity for the purpose of fundraising and whether a professional fundraiser or commercial participator has been involved. b) Whether the charity or person acting on their behalf was bound by any voluntary scheme or standard for regulating fundraising and if so what standard/scheme. c) Any failure to comply with the standard/scheme referred to in (b) d) Whether the charity monitored fundraising activities and if so, how. e) The number of complaints received by the charity or person acting on their behalf regarding fundraising. f) What the charity has done to protect vulnerable people and other members of the public from this “behaviour” (see below).

The revisions refer to the following types of “behaviour” that the vulnerable need to be protected from: •

Unreasonable intrusion on a person’s privacy.

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Unreasonably persistent approaches for soliciting or otherwise procuring money or other property.

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Placing undue pressure on a person to give money or other property.

We will report back when there has been further progress.

No cold calling Also on the issue of fundraising, the Institute of Fundraising has announced that the Code of Fundraising Practice is to be updated so that it prevents doorto-door fundraisers from visiting residences that display the No Cold Calling sign. The new rule states that “Fundraisers must not knock on any door of a property that displays a sticker or sign which includes the words ‘No Cold Calling’”. This will come into effect as from 1 September 2015.

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Community Foundations The Charity Commission has published an article putting forward Community Foundations as an alternative to running a charity with a dormant or ineffective trust fund. More information can be sought from colin@cecommunityfoundation.co.uk.

The Commission has suggested that a Community Foundation may be more appropriate in certain circumstances for example for a short term project, rather than setting up a charity which may run its course in a relatively short period of time. UKCF is the umbrella organisation for all community foundations, and each regional Community Foundation can administer a “named” fund for a particular purpose on behalf of the donor.

Public benefit The Charity Commission has written a letter to the Independent Schools Council as a result of comments made during the Government reading of the Charities (Protection and Social Investment) Bill. The letter noted that some of the peers have argued that charitable independent schools should do more to share their sports, music and arts facilities with schools in the state sector. The Commission’s stance is that trustees should have the freedom to make decisions about how to carry out their legal duties for the public benefit themselves, without having to following prescriptive legislation, however the Commission is going to revisit its example Trustees Annual Report for a charitable school to include more examples of sharing facilities.

Voluntary work Rob Wilson, the Minister for Civil Society is keen to encourage three days of (paid) leave for employees of large organisations and those in the public sector who wish to take on volunteering work. The Cabinet Office will publish proposals for consultation. We will update you when more information is available.

PEM Salisbury House Station Road Cambridge CB1 2LA

t: 01223 728222 f: 01223 461424 e: pem@pem.co.uk

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