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Registering as a Charity

Your ecclesia’s Response to Charity LawBrother Kevin Rawlings

Presentation Two: 21 February 2015

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Charitable status and the CMPA ‘reflection’ day

My question for Walsall Christadelphians: - must an ecclesia by virtue of its existence or size register as a

charity, or - does an ecclesia have a choice whether or not to become a charity?

Conclusion: Walsall Christadelphians is not a charity BUT many other ecclesias are charities, and- have not yet registered with CC, and therefore- currently are not complying with Charity Law

Registration theory only from me. Registration principles borne out by professional advice

My ‘interest’ in this issue

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Each ecclesia is a self-governing entity

So there can not be an umbrella body established to register on behalf of all ecclesias

There will not be an agreed approach for all ecclesias

Different ecclesias have different circumstances. It is possible that:- ecclesia A is a charity- ecclesia B is not a charity- ecclesia C has in substance a charity despite not yet having

properly registered itself as such

There is not one answer for all

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Already registered as a charity with both CC and HMRC - …you can leave now!

An excepted charity - …are you sure?!

A charity having annual income less that £5,000 - …will it always be so? and you are still subject to Charity Law!

Consciously not charitable - …are you basing this on fact or merely desire?

Uncertain of its position - …but it’s good you are here!

Charitable, but not registered with CC - …you need to take action!

An ecclesia may be…

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Annual income greater than £5,000, and not an excepted charity

Registered with CC Has adopted a CC-compliant governing document

incorporating typical Christadelphian Constitution items Trustees are jointly and severally liable for the actions of

the ecclesia Complies with the ongoing obligations of charitable status,

demonstrating that it remains for the public benefit Separately registered with HMRC as a charity and may

claim tax refunds under Gift Aid etc.

Typical scenarios. Ecclesia A…

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Annual income greater than £5,000, and not an excepted charity

Not registered as a charity with CC or HMRC

Does not have a CC-compliant governing document

Has considered its purposes and activities and on the facts has concluded that it is not a charity

Retains joint and several liability of all members for the actions of the ecclesia

Has no obligation to make its accounts available to the public

Will not receive tax benefits under Gift Aid, and its members will probably incur a tax liability upon sale of ecclesial property

Typical scenarios. Ecclesia B…

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Ecclesias A and B each have a coherent position with respect to charity law

Ecclesia A receives the tax benefits and meets the obligations of charitable status, but…- ...ecclesia A may find it difficult to switch to non-charitable

status in the future whilst retaining its property

Ecclesia B receives no tax benefits but does not need to meet the obligations of charitable status, and…- …ecclesia B under current legislation may find it relatively

straightforward to convert itself into a charity in future

Typical scenarios. A and B…

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Annual income greater than £5,000, and not an excepted charity

Not registered with CC Registered with HMRC (or a predecessor body) for tax

benefits Does not have a CC-compliant governing document Has not considered its purposes, activities and history

in order to decide whether or not it is a charity Has not considered who might be held liable for the

actions of the ecclesia

Typical scenarios. Ecclesia C…

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Ecclesia C now needs to regularise its position with respect to charity law

After ecclesial consideration, Ecclesia C will either:- seek to register itself with CC in order to meet its existing

obligation to comply with charity law, and

- taking professional advice, seek to establish a clean position with HMRC

Or:- taking professional advice, seek to ensure that it is no longer

charitable, and

- taking professional advice, work through the potentially serious consequences of disowning charitable status

How ecclesia C might proceed

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Actions and potential consequences…- stop claiming tax benefits

- document the evidence and reasoning for not being charitable

- with professional help seek to cancel the registration with HMRC being clear when the ecclesia ceased to be a charity

- be ready to repay tax benefits received with interest…

- …plus tax penalties – the errant tax payer is usually asked to make an offer of settlement – seek professional help!

Disowning charitable status

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The law appears to require passing ecclesial assets to a charitable cause – the ecclesia may trigger the loss of its hall – seek professional help!

Significant tax may become payable by ecclesial members at a future time when the ecclesial hall is sold (even if the proceeds are subsequently donated to charity)

Non-charitable ecclesias might not be eligible for future financial assistance from, for example:- Other UK ecclesias which are registered as charities- The Christadelphian Hall & Buildings Society

…since these exist as charities for the public benefit, they would need to consider whether it is within the scope of their purpose to donate money to an ecclesia that is not a charity

Further repercussions

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Be careful!

Do not attempt to rely on the following illustrative statement without first seeking professional advice!

Has the ecclesia previously previous held itself out to be charitable? E.g.- Registration with HMRC (appears decisive!)- Representation to the Land Registry- Reduced VAT rate advertising costs- In its own publicity

A possible ecclesial statement of non- charitable status

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On [date] Ecclesia D has endorsed the following:-

The Arranging Brethren, after considering Charities Act 2011 and Charity Commission published guidance, understand that Ecclesia D, for the time being:- is not a Charity, but rather

- is an unincorporated not-for-profit association of individuals who seek to share a Bible-based faith with each other, our families, and the public in [location] and surrounding areas and wherever else we happen to have contacts who are interested to understand or share our faith, whilst maintaining a closed membership and/or communion to only those we have recognised to be our brothers and sisters in Christ.

Note your non-charitable status (1/2)

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Our reasons for concluding that Ecclesia D is not a Charity are as follows:1. Our governing document does not formally define our purposes so as

to be able to show that they are exclusively charitable and for the public benefit. We do not wish to define our purposes such that we would restrict ourselves from using our collectively held monies or assets for a purpose that might be for the private benefit of one or more of our membership, family, or contacts and therefore non-charitable.

2. Our governing document does not rule out the possibility that monies and assets presently held in common by Ecclesia D might at some future point be returned to individual members to dispose of as their individual consciences dictate.

3. [We have had no agreed self-understanding of ourselves as a charitable organization, have never held ourselves out to be charitable, and have not sought and have no present intention of seeking any of the financial benefits of charitable status.]

Note your non-charitable status (2/2)

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In order to register with CC an ecclesia will need to complete an online application – document CC21b- www.gov.uk/how-to-register-your-charity-cc21b

The online application can be completed in stages with the information input to date being saved at the end of each session

The application must not be left inactive for 90 days otherwise the information input will be lost

Before starting the application you will want to have available the following items...

Registration with CC

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Signed and formally adopted governing document for the ecclesia in a form that will be acceptable to CC

Explanation of how the ecclesia's purposes are for the public benefit and will be carried out for the public benefit

Ecclesial contact and bank details

Proof that annual income is greater than £5,000

Detailed information on each trustee, and for each a formal declaration in an approved format confirming eligibility to act as a trustee

If the ecclesia works with vulnerable people (the definition of which includes children), then confirmation that CC's guidance thereon has been read and a signed declaration that the trustees have carried out all checks required by law

Items to be included with the CC online application

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Ecclesias with annual income above £5,000 which are not registered with CC are no longer eligible to:- register with HMRC for new tax benefits, or- continue receiving existing tax benefits (Finance Act 2010)

An ecclesia previously registered as a charity with HMRC, but not with CC and now wishing to regularise its charitable status should seek professional help in revalidating their status with HMRC - differing approaches have yielded differing results to date

To register as a charity with HMRC for the first time, once registration with CC has been achieved, the form ChA1 must be completed on computer through Adobe Reader, printed off and posted hardcopy with supporting documents to HMRC- The HMRC registration largely duplicates the CC registration process

Registration with HMRC

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You are advised to seek it!

David and I ‘aren’t the professional advisors you’re looking for

Here are contact details for a couple of professional advisors we have used in our researches, and found useful…

Professional advice

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Taking independent legal advice as needed, able to provide support with:- Deciding whether or not to register with the CC- Deciding whether or not to remain an unincorporated association for

registration purposes- Preparing an appropriate charitable constitution and charitable objects- Managing the CC registration process- Dealing with HMRC on registration and/or disclosure matters and

advising ecclesias on possible tax and related costs that may need to be repaid to HMRC

- Ongoing advice on compliance with charity law

Keilah Towers of Accounting for Charities Limited presently serves the Christadelphian Bible Mission and the Christadelphian Meal a Day Fund. Fees, which will be reasonable, can be quoted in advance on a fixed basis or, if preferred, on an hourly basis.

Accounting for Charities Limited

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A solicitor specialising in charity law able to provide support through: - An initial telephone consultation on any aspect of charity law, free of

charge- Fuller advice on specific charitable matters , subject to a fee

quotation- A charity registration service on a fixed fee basis

Andrew Lutley, whose contact details are given below, presently serves “The Christadelphian” magazine and is the charity lawyer who has formally reviewed the Guidance Notes recently published by “The Christadelphian”.

Andrew Lutley

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Ms Keilah Towers BSc FCA CTA

Director, Accounting for Charities Ltd Chartered Accountants Arena, Holyrood Close PooleBH17 7FJ

Freephone: 0800 345 7716Direct Line: 07847 376420

keilah@accounting4charities.co.uk

Contact details

AJ Lutley SolicitorsSpringfield, Rookery HillAshtead, SurreyKT21 1HY

Telephone: 01372 279066

andrew@ajlutley.co.uk