Written evidence submitted by Scottish
Council for Voluntary Organisations (SCVO)
SCOTLAND BILL AND CHARITY REGULATION
This brief is submitted in connection with the current
Westminster Select Committee consideration of the Scotland Bill.
Our comments are limited to the issue of Scottish charity regulation
raised by various MPs in the stage 1 debate.
SUMMARY OF
KEY POINTS
The Calman Commission made two recommendations regarding
charity regulation. The UK Government made the decision not to
legislate for this in the Scotland Bill. We strongly support
this decision and believe that suggestions to engage in a separate
and wider consideration of charity regulation in Scotland and
across the three charity jurisdictions outside the process of
the Bill itself is the correct approach. We believe it would
be wholly inappropriate to shoehorn charity law amendments into
a Bill that did not have as its main focus such amendments and
that did not engage the voluntary sector in Scotland or other
jurisdictions such as Northern Ireland in the debate about charity
regulation.
BACKGROUND
There are several differences between English and
Scottish regulation of charities. The principle differences are:
(1) The definitions of charitable purposes are
different and the definition of public benefit is different; also,
the constitution of a Scottish charity must not allow ministerial
control, does not have provision exempted charities. There is
no such restriction regarding ministerial control in England and
Wales.
(2) OSCR acts as registrar and regulator for
all charities operating in Scotland unless they don't occupy land
or premises and don't carry out any activities in Scotland. The
Charity Commission in England does not have the same remit. This
means in practice that an English registered charity may have
to register in Scotland but a Scottish registered charity may
not have to register in England.
(3) The Calman Commission also noted that the
HMRC definition of charity differs from the Scottish definition.
This creates the potential in theory for charities in Scotland
and England doing exactly the same thing to have different tax
exempt status; or, alternatively that a Scottish organisation
refused charitable status by OSCR might nevertheless obtain the
tax exempt status with HMRC.
As a result of these differences, the Calman Final
Report made two proposals:
(1) There should be a single definition of each
of the expressions "charity and charitable purposes"
applicable for all purposes throughout the UK. This should be
enacted by the UK parliament with consent of Scottish Parliament.
(2) A charity duly registered in one part of
the UK should be able to conduct its charitable activities in
another part of the UK without being required to register separately
in the latter part and without being subject to the reporting
and accounting requirements of the regulator in that part.
KEY POINTS
SCVO does not support these recommendations. The
voluntary sector spent years lobbying for a modern charity law
that works for Scotland. Our 2005 charity Act is a reflection
of the unique historical, political and social environment in
which the charity sector in Scotland has developed and matured.
Charitable status in Scotland, the Scottish charity brand, conveys
a mark of respect and trustworthiness in a particular social and
cultural context - one which matches the size and shape profile
of the charity sector in Scotland. It is not simply a particular
tax exempt status.
We made several submissions to the Calman Commission
arguing against proposals to change the Scottish charity definition.
We do not believe there is sufficient evidence of problems to
justify the Calman Report recommendations nor do we believe the
Scotland Bill is the appropriate place for amendments to charity
legislation.
MPs have raised concerns about the burden of dual
regulation on cross border charities. We question the evidence
base for this. We have not seen significant problems for voluntary
organisations arising from having different regulatory regimes
North and South of the Border. What issues did arise were largely
teething problems or technical issues during the period of transition.
OSCR has minimised the burden of dual regulation by revising its
reporting requirements for cross-border charities, which are now
very light touch and rely heavily on the role of the lead regulator.
Furthermore, we take issue with the Calman statement
that a "substantial" number of cross-border charities
are subject to dual regulation. A recent OSCR report on cross
border charity regulation shows 680 such charities, or 2.9% of
the total number of charities registered in Scotland, of which
60% have annual income over £1,000,000. This is not a "substantial"
number and for the majority of those required to register, the
light touch OSCR regulation is a very minor requirement given
their size and relative resources. [http://www.oscr.org.uk/PublicationItem.aspx?id=bd150ce8-776a-4c5c-aff1-10c5fbf73e7f
]
CONCLUSION
There does need to be a full and proper discussion
to review charity definitions and regulations which involves the
Parliaments, Assemblies and Governments, the general public and
wider civil society in Scotland, England and Wales and Northern
Ireland. We have been calling for this for some time, a position
supported by OSCR in its 2010 Annual Report. An intervention
without proper consultation, and inappropriately included in the
Scotland Bill is not the way forward.
February 2011
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