2020 regulation round-up

There is no doubt that 2020 has been a very difficult year for the charity sector and one that will have ramifications for many years to come


Although the events of the year have inevitably led to delays in new regulations being introduced in some areas, we have still seen regulatory updates that charities should be aware of. While some are positive, such as the change in VAT treatment for digital advertising, some may feel like an additional burden at a time when the sector is already strained.

Refresh of the Charity Governance Code

In December, a refreshed version of the Charity Governance Code was published. The publication follows a public consultation on the Code, which received almost 800 responses.

Charities Act 2016 post implementation review

The Department of Culture, Media and Sport (DCMS) published its review of the Charities (Protection and Social Investment) Act 2016 and as a result of the review recommended the renewal of the legislation. The review found that...

HMRC and tax update

In a piece of good news, HMRC has published a brief confirming that VAT is no longer considered on internet search browsing advertisements provided to charities, with the exception of those on personal social media accounts.

Digital advertising was previously considered by HMRC to be standard rated as it was considered to be directed at individuals, however HMRC have accepted that some, although not all, digital advertising is aimed at general audiences and is therefore eligible to be zero-rated.

Advertisements that appear in personal social media accounts remain standard rated however. The Charity Tax Group have said they welcome HMRC's willingness to change its view on digital advertising, but they do disagree with advertising on personal social media and subscription accounts remaining standard rated.

Accounting and auditing

A Charities SORP information sheet on carbon reporting applicable to large charities was published in June. The Information Sheet 5 covers the new requirement for large UK charitable companies to include environmental information in the Trustees' report. The Information Sheet provides guidance to charities which fall within the Companies (Director's Report) and Limited Liability Partnerships (Energy and Carbon Report) 2018 Regulations.

Modern Slavery Act - reforms confirmed

The UK government has renewed its efforts to eradicate modern slavery and to better enforce the Modern Slavery Act 2015. In the Government's response to the 'Transparency in supply chains consultation', published in September, it has set out proposals for reform to strengthen the impact of modern slavery statements.

Legislation and case-law update

Thus far there has been little progress in relation to the Law Commission report 'Technical Issues in Charity Law' and accompanying draft bill, which made a number of recommendations for simplifying charity law. These changes would be the most significant changes to charity law since the Charities Act 2006. However, the Charity Commission are pushing for progress in this area and so there is a chance the Bill will be introduced this year, in particular as it is deregulating and can be dealt with by the special procedure for Law Commission bills.

Charitable trusts and '5MLD'

Few topics excite charity readers as little as anti-money laundering regulation. Most charities do not operate in the 'regulated sector' for money laundering purposes, and there is justified fear amongst charities of ever increasing administrative and regulatory burden on already-stretched charity budgets. Charitable trusts (and incorporated charities administering several subsidiary trusts) were relieved at the start of 2020 to learn that government was minded to exclude charitable trusts from the obligation to register with the UK's Trust Registration Service (TRS) on a risk basis.