This document provides an overview of regulatory compliance for charities. It discusses the importance of compliance, key regulators charities need to be aware of such as the Charity Commission and HMRC, and consequences of non-compliance like reputational damage and legal sanctions. Specific areas of focus are highlighted, including charity disclosures, filing annual reports and accounts, reporting serious incidents, and notifying changes in trustees. Practical steps are suggested to improve compliance like benchmarking current practices, identifying responsibilities, and using checklists. The importance of being proactive rather than reactive is emphasized to increase organizational robustness around regulatory obligations.

1. Essential regulation
Catherine Nightingale
28 April 2015

2. What will we look at today?
• the importance of regulatory compliance
• the requirements of some key sector regulators
• when it can all go wrong – areas to watch
• some behavioural choices to consider
• a few ideas to take forwards
• any questions – chance to discuss queries
NB: Chatham House rules to apply so that all are free to use the information
received, but neither the identity nor the affiliation of the speaker(s) or any
participant may be revealed

3. The Compliance Landscape
Why does compliance seem to have become so topical?
• always been important but times have changed
• increasing number of regulators – e.g. NI Commission, DBS
• introduction of new legislation, best practice
• regulators are under pressure – Cup Trust
• higher expectations from public
• higher scrutiny and accountability
Compliance cannot be ignored; it is or should be part of everyday life of a charity

4. So who are the regulators?
These guys? Or maybe these?
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5. A selection of regulators…
The key sector regulators:
• Charity Commission, OSCR, NI Charity Commission
• Companies House
• H M Revenue & Customs
Sector specific regulators:
• Care Quality Commission
• Ofsted
• Pensions Regulator
Issue specific regulators:
• DBS/PVG
• Environment Agency
• Fundraising Standards Board
• Gambling Commission
• Information Commissioner’s Office

6. Choice of regulator too much?
• work out which ones apply to your organisation
• reject some e.g. not a limited company? Forget Companies House
• watch out for sector specific ones
• might not be as obvious as you think
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7. What happens if it goes wrong?
Organisational sanction:
• reputational damage
• loss of funding
• beneficiaries lose confidence
• reduced impact
• closure of charity
Legal sanction
• fines/penalties
• contractual liability
• criminal liability
• in some cases, personal liability

8. Freaked out or chilled out?
No-one wants to be her… But we probably wouldn’t mind
being him…
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9. And for good reason
Benefits of compliance include:
• avoiding enforcement action
• reducing management distraction; no/less fire fighting
• increased organisational robustness
• providing beneficiaries, donors & funders with confidence
• attracting more funding
• improving impact
• increasing individual charity and sector wide reputations
Why wouldn’t we all strive for these outcomes?

10. So the good news is…
• it doesn’t have to be this way
• a lot of compliance issues can be controlled by you
• systems will NEVER be watertight but:
• you are in the driving seat
• if you are not, you have the chance to improve things
• you CAN anticipate, plan and manage most compliance matters
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11. Some particular areas to consider – “your starter for 10”
Some key essentials to get you started:
• Charities Act disclosures
• Companies Act disclosures
• Filing accounts and annual returns
• Serious incident reporting
• Trustees and key personnel changes
Always be more but these are a good place
to start
Here comes the technical bit…

12. Charities Act 2011 disclosures
For a registered charity with gross income more than £10,000pa:
• section 39 Charities Act 2011 applies
• MUST state charity is “registered”
• MUST state in certain places (see s39)
• NB: Welsh translation provided in statute - “elusen cofrestredig”
• NB: does not require use of charity number
• also offence to authorise the issue of any non-compliant document
• financial penalty for non-compliance
So use of charity number is not the statutory protection

13. Companies Act Disclosures
For a charity that is a limited company:
• The Company … (Name & Trading Disclosures) Regs 2015 apply. Broadly:
• MUST display name at registered office, inspection place, any place where the
company carries on business and in correspondence and documents
• MUST include name, company number, place of registration, registered office
address and limited status on letters, orders and websites
• for more detail, see Companies House Guidance GP1
• financial penalty for non-compliance
Outside these rules but, if relevant, don’t forget to state VAT number
Less is not more
If in doubt, include the information
Won’t risk anything by over inclusion

14. Disclosure banana skins – its easy to slip on these
Some areas to review and double check – see examples handed out
• Be sure what your name is – trading name?
• Stationery – letterhead, compliment slips, envelopes, business cards
• Formal documents – contracts, grant agreements, leases etc
• Financial – invoices, direct debit forms, cheque books
• Fundraising – anything that solicits money
• E-world – email, social media, website
• Trading – place of business, till receipts
• Don’t forget Scottish law – slightly different requirements
• Be careful if you change your name – all this needs changing
• Think about ordering of statements – don’t confuse patrons/disclosures
If in doubt and space allows, include more information than less

15. Accounts and annual return – Companies House (limited company)
Accounts:
• MUST be prepared for company members and for filing at Companies House
• MUST be filed at Companies House within 9 months’ of financial year end
Annual Return
• snapshot of general information about company
• details company's officers, registered office address, shareholders and share capital
• MUST be filed Companies House in 28 days of anniversary of last made up date
• consider signing up for PROOF – added security against fraud
Risks of non-compliance potentially serious:
• automatic financial penalty for late filing
• personal criminal offence for late/non-filing by directors (Trustees) and company secretary
• struck off Companies House register, company ceases to exist and assets lost

16. Trustees Annual Return and accounts – Charity Commission
• separate and additional obligation to file at Charity Commission/OSCR
• applies to all charities with income exceeding £25,000
• MUST file Trustees’ annual return (with copy accounts) at Charity
Commission/OSCR within 10 months financial year end
• no extensions – deadline is absolute
• Charity Commission “red top” warning on register entry
• Charity Commission double defaulters – risks removal from register
• introduction of change to require specific prior approval by Trustees
• build time for this at a Trustee meeting ahead of filing deadline
• beware the serious incident declaration
Diarise, diarise and diarise again. Use diaries for more than one person
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17. Serious Incident Reporting
The legal position:
• Trustees’ duty to report “serious incidents”
• caught by Trustees’ declaration in annual return
• failure to make declaration = breach s.60 Charities Act 2011
• can attract personal liability for Trustees
• Charity Commission may want to investigate/open statutory inquiry
What are the challenges?
• resisting the temptation to not report
• deciding what amounts to a “serious incident”
• no definitive answer; judgement call
• consider every case individually on its facts
Remember:
• see Charity Commission guidance “Reporting serious incidents: guidance for trustees”
• you’ll know it when you see it. Over reporting is better than under reporting

18. What is a “serious incident”?
Some will ALWAYS be serious incidents. As listed by Charity Commission:
• fraud and theft (other than minor)
• donations from unknown/unverified source
• links to banned or terrorist organisation or other unlawful activity
• disqualified trustee acting as trustee
• no vetting procedure for staff, trustees or volunteers
• no safeguarding policies for vulnerable beneficiaries
• charity investigated by a regulator
• suspicions, allegations and incidents of abuse or mistreatment of vulnerable
beneficiaries
NB: no minimum threshold

19. Other serious incidents
Charity Commission will expect other serious incidents to be reported:
• if reported to Police or other agency
• charity subject to Police or other agency investigation
• serious or significant risk to charity, beneficiary, reputation or assets
• internal risk assessment concludes action needed to avoid serious risk
• professional advisers advise notification
NB: again, no minimum threshold

20. When and how to report and what to expect
Filing a report:
• should be reported “immediately” but this can allow time for investigation
• report using rsi@charitycommission.gsi.gov.uk or via annual return
• don’t forget to report to OSCR too
• no template but provide common sense detail
Commission response will be:
• proportionate and risk focused
• within 15 working days
If in doubt:
• protect Trustees and charity and submit report
• report sooner than later

21. Hypothetical serious incidents – to report or not?
Incident Charity £10m turnover Charity £100K turnover
Undischarged bankrupt
is trustee
Theft of £100
Theft of £10,000
Repeat donation £5K
from verified source
New unknown donor £50
not verified
New unknown donor
£5K not verified
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22. Trustee and key personnel changes
Where is the problem as long as you are quorate?
• Trustees, Executive Team and key personnel can have dual responsibility
• don’t forget to obtain “Fit and proper person” declaration
• are they also an HMRC “responsible person”?
• if they are, notify HMRC on form ChV1
• charitable tax reliefs at risk if don’t comply
• see www.gov.uk/government/publications/charities-fit-and-proper-persons-
test/guidance-on-the-fit-and-proper-persons-test
Other “filings” on appointment/retirement
• for Trustees file at Companies House, Charity Commission, OSCR
• amend bank mandates – remove old ones and add new
• can cause practical problems if don’t keep up-to-date

23. Fundraising Standards Board – an additional “regulator”
• not statutory regulator but membership body
• membership potentially beneficial
• use of tick logo
• but membership sets expected standards on fundraising
• includes a formal complaints handling process
• annual return of fundraising complaints
• public register of decisions
• potential reputational damage
• loss of tick logo
• possible reduction in donations, funding

24. Gambling Commission – another “regulator”
• complicated area
• consider taking specialist advice
• only applies if certain fundraising activities undertaken
• e.g. raffles, lotteries
• but not prize competitions or free draws
• may need an operating licence if certain financial thresholds met
• some smaller activities are exempt from need for licence
• note requirement to include certain information on lottery tickets
• type and size of activity will determine required filings
• see http://www.gamblingcommission.gov.uk/Gambling-
sectors/Lotteries/Lotteries-raffles.aspx
Review fundraising activities, apply for licence and diarise as necessary

25. Disclosure Barring Service – a statutory requirement
• deals with safeguarding checks
• important organisation to liaise with
• some important checks to remember:
• lead signatory up-to-date?
• counter signatories up-to-date?
• don’t forget duty to refer if information comes to light
• observe confidentiality
• don’t forget to DBS check all your Trustees for Charity Commission purposes
Information Commissioners Office
• if you handle or store data
• make sure you register with ICO and observe Data Protection legislation
• substantial fines for failure to comply

26. A few ideas to consider…
What practical steps can you take?
• benchmark – where are you now? What is your current position? Do an MOT
• what keeps you awake at night? Ask a “buddy” to tackle it with you
• any near misses? Learn from them
• diarise key dates. Diarise again and in different diaries
• identify areas of note
• allocate agreed responsibility
• take advantage of free resources
• develop checklists for different areas
Remember – no system will be perfect; mistakes will happen but some basic
measures should help

27. Some behavioural choices…increase awareness
Head in the sand? Scanning the horizon?

28. Some behavioural choices – identify areas of concern and prepare
Last minute defence Ahead of time?

29. Some behavioural choices - work to change your position
Vulnerable Or robust?

30. Discussion welcome…
Thank you