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Your ecclesia’s Response to Charity Law Brother Kevin Rawlings Presentation Two: 21 February 2015 1.

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Presentation on theme: "Your ecclesia’s Response to Charity Law Brother Kevin Rawlings Presentation Two: 21 February 2015 1."— Presentation transcript:

1 Your ecclesia’s Response to Charity Law Brother Kevin Rawlings Presentation Two: 21 February 2015 1

2 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 2

3 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 3

4 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! 4

5 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. 5

6 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 6

7 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 7

8 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 8

9 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 9

10 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! 10

11 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 11

12 B e 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 12

13 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. 13

14 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.] 14

15 In order to register with CC an ecclesia will need to complete an online application – document CC21b - 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... 15

16 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 16

17 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 17

18 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… 18

19 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. 19

20 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”. 20

21 Ms Keilah Towers BSc FCA CTA Director, Accounting for Charities Ltd Chartered Accountants Arena, Holyrood Close Poole BH17 7FJ Freephone: 0800 345 7716 Direct Line: 07847 376420 21 AJ Lutley Solicitors Springfield, Rookery Hill Ashtead, Surrey KT21 1HY Telephone: 01372 279066

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