Pothecary Witham Weld Solicitors

The purpose of this note is to provide background information and details for charities that undertake charitable activities in Scotland.

Background

In May 2001 the Scottish Charity Law Review Commission published a report which made recommendations for the reform of charity law and regulation in Scotland. Most of the proposed measures have now become legislation by way of the Charities Trustee Investment (Scotland) Act 2005 (‘the Act’).

The legislation has included the establishment of the Office of the Scottish Charity Regulator (OSCR). Prior to this there existed the Scottish Charities Office which worked in conjunction with the Inland Revenue in regulating charities that operated in Scotland.

Previously, any applications for registration or recognition as a charity were made to the Scottish Inland Revenue charity unit – IR Charities. Those charities that were registered in England and Wales with the Charity Commission were under no obligation to register in Scotland.

The new provisions

Under the new legislation a charity that is undertaking significant operations in Scotland and requires recognised charitable status, is under an obligation to register in Scotland. Such applications should be made to the OSCR and the obligations falls on the charity.

All significant operations by charities in Scotland are to be regulated by the OSCR. This requirement will apply even if the charity is already registered in England and Wales.

Whether or not a charity should register in Scotland will depend on whether or not they fit a certain criteria. This includes:

• Does the charity own or occupy any land or premises in Scotland?
• Does the charity carry out any activities in any office, shop or similar premises in Scotland?

If the above applies to the charity then it should register in Scotland with the OSCR.

In determining whether or not the criteria for registration applies to a non Scottish charity, the OSCR will also examine factors such as whether or not the charity pays rates in Scotland and/or claims relief on non domestic rates from a local authority. Other factors will include whether or not the charity holds open meetings in Scotland or charges for events in Scotland.

The OSCR have said that they will build up a series of case studies which will form the basis of their assessment.

Subject to the application (or not) of the above criteria, in some cases if you are merely fundraising in Scotland you might not have to register. However you should note that you might require a licence or have a formal agreement in place with a professional fund raiser. This would depend on the type of fundraising you are undertaking.

If you are already registered as a charity in Scotland you do not have to take any action as you will already have been issued with a Scottish Charity number.

Registering with the OSCR

The new provisions relating to registration will commence from in April 2006. If you believe that your charity falls within the criteria above you should register with the OSCR. The OSCR has stated that cross boarder and UK wide charities will then have a year in which to register with the OSCR.

In considering applications, the OSCR will examine if the charity meets the charity test as outlined in the Act. In this case the charity must be for a charitable purpose and it must demonstrate a public benefit. The charity test in Scotland is slightly different to the one in England and Wales. The OSCR has said that it aims to develop its own reasoning in determining if an organisation is charitable. The OSCR will be providing initial guidance on this point in spring 2006.

In October 2005, the OSCR will be publishing a consultation programme on the time table for registration and believes that cross boarder charities will be invited to register from September 2006 onwards.

Accounts and returns

If a charity is registered in both Scotland and England and Wales, it will be required to produce accounts and returns for both regulators. However, the OSCR has said that it is working closely with the Charity Commission in an effort to streamline the information required.

Excepted charities in England and Wales

This is a concept limited to England and Wales. All charities operating in Scotland that meet the criteria must register with the OSCR.

The information provided in this handout is guidance only and is not in anyway meant to be the provision of an opinion or legal advice.