When considering whether or not to apply for registered charitable status, charitable clients should consider two common problems which can cause a delay in the process. Those problems are:
CRB checks
Where your charity will be working with children or vulnerable people you may need to carry out CRB checks on your trustees/directors before the Charity Commission will consider an application for registered status.
The rules surrounding CRB checks are fairly complicated, but can broadly be split into three distinct areas, namely: circumstances where you are “required” to carry out CRB checks; circumstances where you are “entitled” to carry out CRB checks; and circumstances where you are “not entitled” to carry out CRB checks.
If your charity is an independent school or a ‘child care organisation’ (broadly speaking, a regulated organisation that is concerned with the provision of accommodation, social services or health care services to children, or the supervision of children) then you are required to carry out CRB checks on the trustees/directors. If your charity provides care services to vulnerable adults then you are also required to carry out CRB checks on all trustees/directors working with those vulnerable adults who are in a care position.
For these purposes, ‘vulnerable adult’ means a person aged 18 or over who has: a substantial learning or physical disability; a physical or mental illness or mental disorder, chronic or otherwise, including an addiction to alcohol or drugs; or a significant reduction in physical or mental capacity.
If your charity is a ‘children’s charity’ (broadly speaking an organisation whose workers normally include individuals working in positions that involve working with children) or the trustees/directors in your charity work in a further education institution and their normal duties of trusteeship involve regular contact with people aged under the age of 18, then you are allowed to carry out CRB checks on the trustees/directors.
If your charity is an organisation that is concerned with the provision of care services for vulnerable adults or
the representation of, or advocacy services for, vulnerable adults, then you are allowed to carry out CRB checks on the trustees/directors who have access to vulnerable adults in receipt of those services.
Please note that the Charity Commission currently takes the view that charity trustees risk being in breach of their duty of care and their duty to act solely in the interests of their charity if they fail, without good reason, to carry out appropriate CRB checks, when they are allowed to do so.
Obtaining the necessary CRB checks can take several weeks, or in some cases months, to come though and can severely delay the speed with which the Charity Commission can consider an application.
Income threshold
At present the Charity Commission has discretion as to whether or not it will grant registered charitable status to charities with annual incomes of less than £5,000. Unless prior consent is granted by the Charity Commission, an application for registration that is lodged without the necessary documentary evidence of income will be automatically rejected.
If you are unable to show that you have an annual income of more than £5,000 per annum an application for registration can still be lodged, but only after the Charity Commission has confirmed in writing that it is prepared to consider the application. Any such request will need to set out details (plus any evidence that is available) of likely income of your charity over at least the next 12 months in order to make a good case for registration. Should the Charity Commission confirm that it is prepared to consider the application written confirmation of the same must be included with the application when it is lodged with the Charity Commission.
If the Charity Commission is not prepared consider the application for the time being you may still be able to enjoy the benefits of charitable status without having to meet the regulatory requirements of registered charities. You will be able to apply directly to HMRC for tax relief and an HMRC charity number should be accepted by other organisations such as banks and grant funders as evidence of charitable status.
However, to obtain HMRC tax relief you will need to satisfy HMRC that you are established for charitable purposes only. To do this you will need to produce a copy of your governing document. Careful preparation and drafting of the governing document is important for these purposes.
Obtaining HMRC tax relief can be useful where a charity is unable to register at the Charity Commission due to income constraints. However, many clients like the extra standing that can be perceived to come with having a registered charity number. If you are a registered charity this is usually accepted as sufficient evidence by HMRC to be considered as a charity for tax purposes.
Changes in the law
Finally, please note that not all of the provisions in the Charities Act 2006 have been implemented. One of the provisions contained in the new Act yet to come into force is an amendment to the Charities Act 1993 that will result in the £5,000 threshold being removed. Unfortunately, there is no sign of the relevant provision coming into force at this moment in time but we are monitoring the situation and will update clients as and when appropriate.
For more information or advice on charity law, please contact Mark Lewis on 01926 880700 or email here.
