Charities Act 2022
The first which came out with relatively little fanfare was the Charities Act 2022. Whilst much of the content of this Act is mostly of interest to Charity Lawyers there were a couple of interesting points which may be of relevance:
It is now possible to make payments to Trustees for goods supplied. We have moved from a position of no payments being made to trustees, to payments for services other than as a trustee to now being able to pay them for goods too. This seems to go against the Charity Commission’s general concern over conflicts of interest and appears an odd change. Charities will still need to ensure that the appropriate safeguards are put in place over such payments and the relevant disclosures are made in the financial statements.
The Trustees are now able to make ‘moral’ payments at levels capped based on income. The example given on this is when a legacy has been received but the charity is aware that the donor had changed their mind without changing their will. This does not seem to be a power that will be regularly exercised, but a clear document trail should be produced when such payments are made.
The relaxation of what Trustees can do when fundraising generates more income than was required, capped at levels of excess. This situation would arise when fundraising for a specific project would mean that funds would be restricted to that project. We would always recommend that when doing such fundraising that the appeal is kept quite broad to enable the utilisation of funds, but if that has not been done then this does provide a limited but sensible solution.
Changes to align the ability to make changes to purposes across various charity types (unincorporated and incorporated charities).
The main Act for Charity accounting remains the 2011 Act and there is a 2016 Act which deals with issues around fundraising, so I suspect we may be due a consolidating Act at some point to bring this all within one piece of legislation.
Companies House Reform
As a result of the ongoing Corporate Transparency review being carried out by the government in a bid to fight organised crime a White Paper was issued in February 2022 in respect of Companies House Reform. This will require a new Companies Act before the changes come into force, so the timing of implementation is not yet clear, but the most significant points to note are:
Filing deadline not shortened as previous consulted on, but new Companies Act will include facility to make this easier in the future;
Small companies will have to file full accounts, no longer abridged or filleted versions. So, Directors’ Report and Profit and Loss account will be on the public record;
Micro companies must file a Profit and Loss account but can still take exemption from Directors Report;
Dormant companies must file eligibility statement each year; and
All companies must file digitally with tagged accounts (as with HMRC).
Companies House will also be getting some new and increased powers to enable it to drive transparency and accuracy of information as follows:
Greater control and ability to challenge information on the register;
Greater powers in respect of identity verification;
Greater power to share data (HMRC/Law Enforcement);
As a result of the above there will be improved privacy protections; and
Ban on corporate directors (almost, with some very rare exceptions).
If you need more information on these changes and advice on how they may affect your operations, please get in touch with the education team on 0330 058 6559 or email firstname.lastname@example.org