Legal Update: Bill will close disqualification loophole

Plus: the government publishes draft legislation for the Finance Bill 2015, and community amateur sports clubs get new rules, writes Adrian Pashley

Legal update
Legal update

Bill loophole

The Charity Commission's report on its inquiry into the aid charity Helping Hands for the Needy says that one trustee – Mohammed Ashfaq – had sole control of the charity's bank accounts and had acted as its chief executive without any oversight from other charity trustees. Despite claiming to be unpaid, Mr Ashfaq, his wife and family had received significant unauthorised payments and other benefits from the charity. The commission suspended Ashfaq from acting as a trustee, but he resigned before the commission was able to exercise its power to remove him.

This loophole, whereby someone resigns their position in order to avoid removal and consequent disqualification, will be closed by clause four of the draft Protection of Charities Bill, which is currently being scrutinised by parliamentary committee. In this case, fortunately, Ashfaq and another director were disqualified by the Department for Business, Innovation & Skills from acting as company directors – and therefore also as trustees – for periods of 12 and five years respectively.

Finance Bill 2015

In December, the government published draft legislation to be included in the Finance Bill 2015. Reflecting announcements made in the 2014 Budget, it included a measure to enable non-charity intermediaries to have more involvement in Gift Aid administration. It also included draft provisions to allow small-scale generation of renewable energy by community organisations to be eligible for social investment tax relief.

At the same time, the government published further details of other proposals to encourage investment in social enterprise, including by enlarging SITR.

Rules for sports clubs

Draft regulations on conditions for qualifying as a community amateur sports club have been laid before parliament and are expected to come into force no later than 1 April 2015. However, some of the changes will be backdated to 2010 so that HM Revenue & Customs can register clubs whose applications have been on hold during the review of the legislation. The new rules have been criticised for being overly complicated and prescriptive, and for placing additional administrative burdens on clubs.

To counter this, the government has said it will publish clear guidance to accompany the regulations that clubs will find easy to understand and follow.

Charity audit thresholds

The Cabinet Office is consulting on its proposal to increase the income threshold above which charities must have their accounts audited from £500,000 to £1m. The consultation also asks questions about which professional bodies' members should be allowed to carry out independent examination of the accounts of charities with incomes of more than £250,000. The consultation closes on 27 January.

This column is written by Adrian Pashley, charities editor at Thomson Reuters, Practical Law, on behalf of the Charity Law Association

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