Legal Update: Charities bill contains new powers for the Charity Commission

Plus: a report on breach of trust; and Gift Aid declarations and partnerships

New powers proposed
New powers proposed

The Charities (Protection and Social Investment) Bill 2015-16 was announced in the Queen's Speech on 27 May, and received its first reading in the House of Lords the following day.

The bill amends the Charities Act 2011 in order to provide better protection for charities in England and Wales from abuse and to equip the Charity Commission to tackle abuse more effectively through the following means:

- Extending the criteria for automatic disqualification from charity trusteeship. Separately, the commission has sought to provide reassurance that it would use the new power only when there is a clear case for doing so.

- Enhancing the Charity Commission's powers to allow it to issue formal warnings, direct that a charity be closed after an inquiry and disqualify individuals from acting as trustees.

- Addressing gaps and weaknesses in the commission's existing powers.

The aforementioned measures were part of the draft Protection of Charities Bill. After the government responded to a joint parliamentary committee's scrutiny report on the draft bill, several amendments have been added to the new bill, including:

- Extending trusteeship disqualification to include senior management positions.

- More detail and stronger safeguards on the commission's new power to issue official warnings.

- The introduction of a new power for the commission to direct a person not to take or to stop taking an action while a statutory inquiry is under way.

- Requiring the commission to give public notice, inviting responses, of its intention to use its new power to direct the winding-up of a charity.

The bill also proposes to give charities a specific power to make social investments and creates certain statutory duties related to this, as recommended last year by the Law Commission.

Breach of trust

The commission has published a report on its intervention in a breach of trust in the use of a recreation ground owned by a charity, Oxley Park, whose sole trustee is Sheffield City Council. The report highlights the requirement for trustees to ensure that land held for a designated purpose is not used for any other purpose, and provides a reminder to local authority corporate trustees to keep charity and local authority land separate.

Gift Aid declarations on partnerships

From 6 April 2016, when a business partnership (including an LLP) makes a donation to a charity or a community amateur sports club, each individual partner will have to make their own Gift Aid declaration. Until then, one partner can make a Gift Aid declaration on behalf of all the partners, provided the terms of the partnership agreement or some other instrument given under seal allows this.

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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