1. Spring clean your constitution!

The 2015 NHF model rules focus on updating the 2011 version to reflect recent changes in law and regulation, as well as making the rules more user-friendly.

Key changes include:

  • stripping out detail where the rules duplicated provisions within internal governance documents (for example, the functions of the Board were previously set out in Rule D1);
  • the inclusion of provisions around subsidiary or non-subsidiary status of a society (as required under the Regulator’s new registration criteria);
  • confirmation that shares are non-withdrawable;
  • the removal of the one third limit on Board members who are employees (although quorum requirements state that they must still be in a minority); and
  • Board member terms of office have been changed to reflect the new NHF Code of Governance and the Regulator’s expectations.

We are pleased to have contributed to preparing the new rules. If you have any queries about how your organisation can update to the 2015 version, please get in touch.

2. Regulating the Standards

The team has been on tour over the last few months, providing Board training on the new Regulatory Framework to our national RP client base. What has become clear during these sessions is the enthusiasm with which they have met the Regulator’s periodic in-depth assessment (“IDA”) pilot.

As a result of the IDA pilots, the Regulator published a revised version of ‘Regulating the Standards’ on 19 June. This outlines the Regulator’s new approach to assessing compliance with the Regulatory Framework, including confirmation that it will take a ‘risk-based approach’, utilising its quarterly sector risk profile analysis to determine which RPs will be subject to an IDA (in addition to a 3-4 year cycle).

We understand that IDAs will be bespoke to each RP, but will broadly focus on gaining a detailed insight into their risk profile, exposures, financial strengths and weaknesses and governance.

Click here to read ‘Regulating the Standards’ in full.

3. Timescales for constitutional consents

The Regulator has provided some guidance on how it will approach routine applications for consent to changes to Articles of Association or Rules, with all applicants being encouraged to use the ‘in-principle consent’ route (which should be processed within 10 working days) before approaching the Regulator for formal consent.  Where there are no complicating factors, the guidance is that formal consent applications from companies will be dealt with in 5 working days. However, where an application is received from a registered society, the timescale is 9 weeks for routine applications.  Where queries are raised or the consent application involves an organisational restructure, RPs are to expect much longer timescales, and we are told that requests for a fast turnaround will be very much the exception to the rule.

It is increasingly important for RPs to discuss timelines with their regulatory manager as early on in the process as possible and to plan accordingly. If you are not sure whether a venture your organisation is looking at requires consent, please do get in touch with a member of the ACS team and we will be happy to assist.

4. Companies House – late filing fines

In 2014/2015 Companies House issued 76,417 penalties to companies in England and Wales for failure to submit their accounts on time. The guidance on late filing fines was updated in April, and updates the fines as follows:-

Length of period

(measured from the date the accounts are due)

Penalty Private Company

Penalty Public Company

Not more than 1 month

£150

£750

More than 1 month but not more than 3 months

£375

£1,500

More than 3 months but not more than 6 months

£750

£3,000

More than 6 months

£1,500

                 £7,500

If a company is late two years in a row in filing its accounts, the fine is doubled. You can sign up for email reminders as an additional safeguard.

Spotlight: Business Rates

We have received several queries over the last few months in relation to challenges from local authorities over relief from non-domestic rates (“Business Rate Relief”).

Charities are potentially eligible to receive two types of Business Rates Relief: mandatory (80% of the rates liability) and discretionary (20% of the rates liability).  In order to qualify for mandatory relief:-

  • the ratepayer must be a charity or trustees for a charity; and
  • the property subject to the business rates must be wholly or mainly used for charitable purposes (whether of that charity or of that and other charities).

If a local authority also approves discretionary relief, the charity will receive 100% Business Rates Relief. The guidelines for discretionary relief are usually outlined within the Business Rates Relief application form, which should be available from the local authority’s website.

A common reason for challenge has been that the local authority believes the relevant property is not wholly or mainly used for charitable purposes, for example if it used for essentially administrative purposes, fundraising, personal management or other central services. Local authorities are increasingly challenging such applications because, where they are rating authorities, they are now able to keep half of any increases in business rates revenue they generate, to invest in local services. The additional 20% discretionary relief is also becoming subject to stricter controls because larger proportions of such relief are funded locally (rather than from the Treasury).

The reason for refusal of relief in any case will heavily depend on the facts. We recommend that when making an initial application for Business Rates Relief you provide as much information as possible to demonstrate the link between the use of the premises in question and the delivery of your charitable purposes.

For more information

Please get in touch with Sarah Greenhalgh if you would like any assistance with your application or guidance on how to deal with the appeals procedure if a challenge is made.

New Model Rules for CLTs
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Richard Handley Inquest
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Transforming Business
Transforming Business

We welcome the Labour Party’s commitment to doubling the size of the co-operative economy. We wholeheartedly support the ambition to grow this vitally important part of the economy.