Legal Update: New scheme for social investment tax relief

Adrian Pashley provides an overview of recent developments in voluntary sector law, on behalf of the Charity Law Association

Legal update
Legal update

Social investment tax relief goes live

HM Revenue & Customs has published guidance on how to claim the new social investment tax relief. The scheme went live when the Finance Act 2014 received royal assent on 14 July. Individuals can claim income tax relief of 30 per cent of the value of qualifying investments of up to £1m a year in charities, community interest companies or community benefit societies. Capital gains tax relief is also available. However, the maximum that an eligible social enterprise can receive in tax-advantaged investments is EUR344,827 (£275,000) in any three-year period. This is considered too low to have a transformative effect on the market, so the government is consulting on proposals to increase that limit and to enable people to invest in social enterprises through collective schemes. The consultation closes on 18 September.

Dove Trust decision might leave trustees exposed

The High Court's ruling on the distribution of money held by the Dove Trust after being donated through the fundraising website CharityGiving concludes that the funds were subject to trust and contract law. In particular, would-be beneficiaries might have enforceable contractual rights under the Contracts (Rights of Third Parties) Act 1999. The trust's trustees might therefore be open to the would-be beneficiaries bringing claims against them for breach of contract and breach of trust, in the hope of recovering any shortfall between the funds distributed to them and the donations made. (Charity Commission for England and Wales v Framjee and others [2014] EWHC 2507.)

Objections to charities' views gave no standing to appeal

The First-tier Tribunal (Charity) has held the Charities Act 2011 could not be read as giving every taxpayer a right to bring an appeal purely on the basis that they disagreed with the enjoyment of fiscal advantage by a registered charity. This arose when members of the campaign group Stop the JNF, who the tribunal said had "deeply held and continuing objections to the views and activities" of three pro-Israel charities, did not have standing to appeal against a Charity Commission decision not to deregister the charities. (Nicholson and others v Charity Commission for England and Wales.)

Salutary lesson for solicitors

The commission's inquiry report on the Amy Marion Dwyer Will Trust warns executors and trustees to be alert about whether a will establishes a charitable trust and should be registered as a charity. Complaints raised by a beneficiary about how the trust was being administered by its trustees led to regulatory action by the commission.

Commission updates safeguarding guidance

The commission has published its updated guidance for trustees on duties for safeguarding children and young people. Changes include a revised introduction outlining charity trustees' duties, an updated section on the commission's role, updated information on the Disclosure and Barring Service and a new section on charities working directly with children abroad.

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

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