Business Matters
Charity / Community & Social Enterprise

Comprehensive legal services for charities.

Robinsons charity department provides legal advice for various charities throughout England and Wales, some well known in the UK and others known for their overseas work. These include:

• Welfare charities
• Religious charities
• House associations
• Voluntary bodies
• Charitable companies
• Community charities
• Environmental charities
• Building preservation charities
• Medical charities
• Sports clubs
• Community amateur sports clubs
• Social and Community Enterprise
• Community Interest Companies

The Charity Department of Robinsons is based in Derby, East Midlands and provides legal advice and services for a wide range of charities throughout England and Wales including UK based charities providing relief in overseas countries, eg Albania, Zimbabwe, China. The Charity Department of the firm is headed by Stephen Marshall (Solicitor). Stephen retains his listing as an expert in charity law in the current edition of Legal Experts.The Department also comprises Christopher Hallam, Senior Associate (non-solicitor), Kishanie Sivanesan, Solicitor and Jackie Abbott, Legal Assistant.

Expertise includes advising on all forms of formation and registration of charities: be they incorporated companies, unincorporated associations or charitable trusts. The Charity Department has well-established and respected connections with the Charity Commission.

The Charity Department provides a full company secretariat service for incorporated charities.

The Charity Department also provides advice, guidance and support for Charities the subject of Charity Commission investigations, and HMRC investigations.

FAQs - please see our Terms

1) Why do charities need to use legal services?
Charities, like businesses, need to have proper contracts and trading structures and some charities need to have a subsidiary trading company for non-primary trading purposes. Robinsons will advise when such a company is needed. The Firm will also advise on domain names, how to protect the Charity's intellectual property rights, and obtain and use trade marks.

Good governance of charities require clear management policies, examples of which are Travel Expenses, Recruitment, Risk Management and the avoidance of money laundering. Robinsons can advise on and draft these policies to suit your charity's needs

Recent legislative changes include the Charities Act 2006. One object of this new Act will require all charities to meet a public benefit test

2) We are considering selling some of our land, what should we do?
The Charity Department also advises on acquisitions and disposals of charity land in accordance with Charities Act requirements. The governing documents of all charities need to be reviewed from time to time and the Department is able to do this and also give guidance on corporate governance.

3) What are the laws regarding fundraising?
Fundraising by charities is a highly specialised area and the Charity Department is able to advise on controls introduced by the Charities Act 1992 and the various agreements that charities/ fundraisers should enter into.

4) How do we go about amalgamating with another charity?
The Charity Department advises many charities on amalgamations and co-operation with other charities.

5) Who are your charity clients?
Robinsons have been heavily involved in the Genesis project for social inclusion based in Alfreton, Derbyshire.
The project in its first year achieved runner up Social Entrepreneur Project. 2004 was a very busy time for the Charity Department in the formation of Kingdom Bank Limited a wholly owned subsidiary of Assemblies of God Property Trust. They acted for Derwent Valley Trust and Belper North Mill Trust in their incorporation and registration as charities. The Firm also worked for both those bodies in assisting them in making their application to Entrust for registration and in the formulation of projects submitted by Derwent Valley Trust, which is situated in the World Heritage Site in Derbyshire. Stephen Marshall and Christopher Hallam are joint company secretaries of Derwent Valley Trust and and until recently were joint secretaries of Belper North Mill Trust.

Stephen Marshall and Christopher Hallam are joint company secretaries of Derwent Valley Trust and until recently were joint secretaries of Belper North Mill Trust.

6) What is primary trading and what trading activities should be in a separate limited company?

1. Charity law does not permit charities to carry on a trade because carrying on a trade invariably involves a risk and risk should not be undertaken by a charity simply to raise money.

However, charity law does allow for a trade to be carried on for the charity's primary purpose. The following are examples:

• the provision of educational services by a school or college in return for course fees;
• provision of residential accommodation by a resident care charity in return for payment;
• fees charged for admission to exhibitions at an art gallery;
• fees charged for audience to attend stage productions by a theatre company.

2. Charities are allowed to trade where the goods being sold are produced by their beneficiaries.

The following are examples:

• Poppies for the Remembrance Day Appeal on behalf of the Royal British Legion
• Works of art by disabled war veterans who are beneficiaries of a veterans' charity
• Items made in a workshop by handicapped persons who are beneficiaries of a handicapped persons' charity.

3. Where a charity is carrying out a primary purpose activity that is income-generating, for example any of the four points listed at paragraph 1 above, then there may be some ancillary income arising from, say, the sale of food and drink in a restaurant or bar. The raising of funds in this way will not necessarily be regarded as trading ancillary to a primary purpose.

4. Where a charity is given assets to sell, for example the contents of a house clearance and/or other property, then the selling of those items is not in the course of trade and need not be carried out through a subsidiary trading company.

Neither the Charity Commission nor the Inland Revenue (as the law presently stands) treat trading income arising from sale of donated goods or from a lease of land and buildings, as trading income.

Profits from occasional trading (for example, volunteers organise bazaars, jumble sales, car boot sales, disco's, carnivals, firework displays, etc) are, so long as the activity is not a regular event and certain other criteria are met, not taxable.

Donated goods, like other goods, come within the scope of VAT but donated goods are zero rated where sold through charity shops.

5. Where a charity wishes to raise substantial monies from trading, these activities have to be carried on by a subsidiary trading company which is often wholly owned by the particular charity.

6. Instances will arise where a charity is selling donated goods as well as some which are not and this is called mixed trading. Mixed trades do not necessarily require a subsidiary trading company to be formed and the profits may be considered to be within primary purpose exemption, if the non-primary purpose part is small in absolute terms, and has a turnover which is less than 10% of the whole.

7. Small trading

Since April 2000 a new exemption applies to the profits of all trading activities that are not already exempt from tax.

To qualify:

• the charity's turnover must not exceed £50,000, or
• if greater, 25% of the charity's “incoming resources”, subject to an overall limit of £50,000
• the profits must be used for the charity's objects.

8. Rate Relief

Where business premises are used by a charity for charitable purposes the charity is entitled to 80% mandatory rate and Council Tax relief. The rating authority has a discretion as to waiving the remaining 20%. It is important, therefore, to ensure, if maximum rate relief is to be obtained, that the premises are only used for charitable purposes and that any non-charitable activity is carried on through a separate subsidiary trading company elsewhere.

For the Charity Commission's booklet CC35 - Charities and Trading, visit : http://www.charity-commission.gov.uk/publications/cc35.asp

If you do not have access to the Charity Commission Website then the booklet can be obtained by contacting the Charity Commission at: Woodfield House, Tangier, Taunton, Somerset, TA1 4BL.

7) Can a social or community enterprise be a charity?

More projects are being set up and administered for the benefit of the community or particular social group.  Whilst it may be appropriate in many cases to provide the delivery through a charity, which has been incorporated as a company limited by guarantee, or through an unincorporated association or trust, an alternative legal structure would be to provide the community and social enterprise through an Industrial and Provident Society.  It is worth considering carefully when looking at limited liability legal structures whether to become a company limited by guarantee and registered as a charity or registered as an Industrial and Provident Society, and become an exempt charity.

Industrial and Provident Societies are regulated by the Financial Services Authority which will determine whether the applicant’s community or social enterprise qualifies for charitable Industrial and Provident Society status.  Where it does, the Inland Revenue recognises the status by the application of certain Income/Corporation Tax benefits.

Another major distinction between charities limited by guarantee and charitable industrial and provident societies is that the latter may more easily include founders and employees as directors and provide for them to be remunerated.

8) What is Charitable Purpose?

All charities must have charitable aims or purposes that are for the public benefit.

Charitable purposes (or aims) are those that fall within the various descriptions of charitable purposes in the Charities Act 2006, set out below, and any new charitable purposes that might be recognised in the future.

a) the prevention or relief of poverty;
b) the advancement of education;
c) the advancement of religion;
d) the advancement of health or the saving of lives;
e) the advancement of citizenship or community development;
f) the advancement of the arts, culture, heritage or science;
g) the advancement of amateur sport;
h) the advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity
i) the advancement of environmental protection or improvement;
j) the relief of those in need, by reason of youth, age, ill-health, disability, financial hardship or other disadvantage
k) the advancement of animal welfare;
l) the promotion of the efficiency of the armed forces of the Crown, or of the efficiency of the police, fire and rescue services or ambulance services
m) other purposes currently recognised as charitable and any new charitable purposes which are similar to another charitable purpose.

For advice on:
defining public benefit
assessing public benefit
Contact: Christopher Hallam

9) Are there any other charity type organisations?

A new type of seperate legal entity will be available soon, and is called a Community Interest Company ("CIC").
For further on Community Interest Company information click here.

For further information on charitable industrial and provident societies, please contact us.

The Firm is, we believe, the leading provider of legal services to independent religious charities.