Worthingtons advise on provisions relating to registration in The Charities Act (Northern Ireland) 2008
The Charities Act (Northern Ireland) 2008 received Royal Assent on 9 September 2008 and parts of the Act have been brought into force by a series of Commencement Orders.
This piece of legislation is the most far reaching and radical change to the law as it affects charities within Northern Ireland and brings the law into line with charities law as it affects the remaining parts of the UK. One of the main provisions of the Act, which has been implemented, is the creation of the Charity Commission for Northern Ireland (“CCNI”).
Part of the remit for the CCNI is the retention of a register of charities in Northern Ireland, but the relevant provisions of the Act in relation to the register of charities has yet to be implemented. The delay has been caused by the definition of ‘public benefit’ in section 3 of the Act. After public consultation on the Act, it emerged that section 3 was open to legal challenge as it was inconsistent with other parts of the Act necessitating an amending piece of legislation which should receive Royal Assent before the New Year. In the meantime, whilst there is no formal register of charities, transitional procedures are in place in relation to a list of ‘deemed’ charities. ‘Deemed’ charities are charities with HMRC approved status. This list can be found on the Commission’s web site at www.charitycommissionni.org.uk. There are currently over 7,500 charities on the deemed list.
Prior to the establishment of CCNI, the DSD was the charity authority for Northern Ireland carrying out functions attributable to it under the charity laws, but it had no statutory role in connection with the setting up of a charity. If an organisation wished to form a charity it merely prepared a constitutional document incorporating charitable approved activities and had the same approved by HMRC in Bootle for tax purposes which would then issue the charity with a charitable reference number.
The new Act fundamentally alters this in the establishment of CCNI and the Charity Tribunal for Northern Ireland. The CCNI has extensive powers and a number of functions such as determining whether or not an organisation is a charity and identifying and investigating apparent misconduct or mismanagement in charities. Once the provisions concerning registration are brought into force, the CCNI will maintain a register of charities which will be available for public inspection and every charity in Northern Ireland will be obliged to register online and to notify the CCNI of subsequent changes. The registration process will involve the supply by the charity to the CCNI of certain documents and information including its constitutional documents. Charities will then need to include their registration details on any formal documentation as prescribed by the Act, which includes cheques and invoices.
The CCNI has notified 20 charities that they will be the first charities to complete the registration process which is due to commence in the autumn of 2013 and is expected to take 2 – 3 years to complete. Any new charity will be obliged to register with CCNI once the registration provisions of the Act have been implemented. The Act places a duty on charity trustees to ensure that accurate accounting records are maintained and prescribes the form of accounts depending on whether the annual income for the charity is more or less than £100,000. The Act provides for auditing requirements dependent again on the level of income and charity assets. Those volunteer trustees involved in the running of charitable concerns will know the time and commitment required and the difficulties in recruiting volunteers to what is essentially an unpaid role. The Act makes provision for remuneration for certain trustees provided stringent conditions are met as set out in the Act. These conditions include stipulating the maximum amount of remuneration in a written agreement, the payment of remuneration being a reasonable thing for the charity to do, the payment being in the best interests of the charity and that the constitutional documents of the charity don’t prohibit such payment.
A great deal of the constitutional documents for charities, particularly those registered as companies limited by guarantee, prevent such payments and accordingly these would need to be altered involving the consent of the members of the charity and in due course the CCNI.
Charities accordingly must start preparing for registration. Trustees should be reviewing their governance procedures and regularly accessing the CCNI website which includes excellent guidance for trustees in this area.
Celia Worthington, senior partner of the Commercial Department of Worthintgtons Solicitors also specialises in Charities law and would be happy to deal with any queries you may have in relation to the issues dealt with in this article.