Nick Burrows Partner Charity and Commercial Law

Charity update Charitable Incorporated Organisations The Hodgson Report VAT Cost sharing exemption Collaboration and mergers

Charitable Incorporated Organisations Timetable for conversion from charitable trust now proceeding Features: –Separate membership and trustees –Limited liability for members –Legal entity that can enter into contracts –Not regulated by Companies House –BUT some concern about charges/mortgages

Charitable Incorporated Organisations Conversion process: –Asset transfer agreement –TUPE –Property transfers –Contract transfers

Lord Hodgson’s report Public benefit – should it be defined? Payment of trustees Limitation of trustees’ terms of office Threshold for registration Threshold for audit Penalties for late submission of accounts Charges from Commission for registration

Lord Hodgson’s report Declaration of spending on political and communications work, and received from government Support for more use of the FRSB logo

VAT costs sharing exemption Sharing back office services – the VAT problem ‘Separate independent entity’ Must be a separate taxable person

VAT costs sharing exemption The conditions: –An ‘independent group of persons’ supplying services to its ‘members’; –All members must carry on VAT exempt activity; –Services must be ‘directly necessary’ for the exempt activity;

VAT costs sharing exemption Conditions cont’d: –The CSG only recovers the members’ individual share of the expenses incurred; –The application of the exemption is not likely to cause a distortion of competition

Collaborative working, consortia and mergers Single function/activity collaboration Joint venture Consortium working Merger

Collaborative working, consortia and mergers Benefits –v– risks Benefit analysis Risk analysis Think through roles and responsibilities Record the details in writing

Collaborative working, consortia and mergers Mergers –Transfer of membership –Transfer of assets –Formation of new vehicle

Collaborative working, consortia and mergers FOR ANY COLLABORATION: DUE DILIGENCE IS CRUCIAL

Nick Burrows