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Scottish charities may receive public benefit leniency

Finance | Gareth Jones | 28 Apr 2009

Scottish charities may be given assistance in meeting the public benefit test, after the Scottish government published a consultation document proposing amendments to the Charities and Trustee Investment (Scotland) Act 2005.

One of the proposals is that those charities with constitutions drafted under the pre-2005 tax legislation will be presumed to meet the charitable purposes test, even if they don’t strictly fulfil the requirements of the new Act.

The consultation paper suggests that this would save charities having to amend their constitutions on what in many cases “would be a minor technicality”, adding that five of the 30 charities reviewed under phase 1a of the Rolling Review last year were in this position.

Gavin McEwan (pictured), senior associate - trust & tax and charities at Turcan Connell, said he believes OSCR may now take a more relaxed view on charitable purposes.

“There is a precedent to this in that OSCR had been interpreting legislation on trustee indemnity insurance as falling foul of remuneration rules, but the Scottish government said this was an unintended effect and OSCR has therefore said it will take a more lenient approach.

“I think OSCR should do much the same in this case.”

OSCR 'should be able to appoint trustees'

The consultation also proposes that the trustees’ report and accounts should be required to explicitly set out how the charity meets the public benefit test, and that OSCR should have the power to appoint additional trustees in cases where the charity does not have a sufficient quorum or mechanism to do so.

The consultation on proposals for “minor amendments” to the Act is open until 24 July.

Meanwhile, the Scottish government has revealed that it will “explore” the idea of providing short-term loans to charities struggling due to the recession, following a roundtable discussion with third sector representatives earlier this month.

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