David Clarke interviews Partners Gavin McEwan and Chris Sheldon at Turcan Connell, Princes Exchange, 1 Earl Grey Street, Edinburgh, EH3 9EE.

Charities that operate in more than one legal jurisdiction can face risks if they fail to meet what is expected of them by multiple regulators. Turcan Connell Partners Gavin McEwan and Chris Sheldon discuss this in more detail.

For more information or if you have any further questions, please get in touch by emailing enquiries@turcanconnell.com

 

David Clarke

Hello, I'm David Clarke and welcome to the Turcan Connell videocast on Issues Facing Charities. I'm here with partners Gavin McEwan and Chris Sheldon and today we're going to be talking about cross-border charities. Chris, what exactly is a cross-border charity?

Chris Sheldon

Well, it's a charity which operates in more than one legal jurisdiction. Perhaps that's because it occupies property, conducts its activities or its management or control are based in different places and that can be within the UK, because in Scotland there's a different regulatory requirement for charities than there is in England and Wales. It can arise because charities may have grown their operations beyond their original border or because they've set out from the outset to further some or all of their charitable purposes at home and elsewhere. The largest number of cross-border charities registered in Scotland are from England and Wales, and so they comply with both the Scottish charity regulator, OSCR, and with the Charity Commission in England and Wales. It's worth also bearing in mind that there's an element of cross-border in all Scottish charities, because, in order to obtain the charitable tax status, Scottish charities need to comply with the English and Welsh charity test under UK tax law.

David Clarke

Gavin, are there particular risks that these cross-border charities face?

Gavin McEwan

There are particular risks for cross-border charities, they have to comply with different laws, different sets of regulations, different regulatory expectations in each jurisdiction in which they operate, and the risk arises where charity trustees aren't keeping up-to-date with the whole range of law and regulation that they have to comply with. If charity trustees don't have the skills to manage that and to maintain that knowledge, they need to seek external professional advice.

David Clarke

So, Chris, what are the implications for charity trustees if they fail to meet what's requested of them of these multiple regulators?

Chris Sheldon

Well, investigation by a charity regulator into the affairs of a charity, whether that's through a complaint or an enquiry, can be a time-consuming and anxious period for charity trustees and there may need to be professional advice to help explore whether there's legal, accounting or tax issues in question. Sanctions can be wide-ranging; the loss of charitable tax status or the failure to meet the charity test needs to be borne in mind. It can have financial implications for the charity, not just in its home territory, but elsewhere in which it operates. In Scotland, the breach of a charity trustee duty is treated as misconduct in the administration of the charity and that's a serious matter, but at the other end of the scale, there are criminal sanctions which can apply – fines or imprisonment – for charity trustees that continue to act following disqualification.

David Clarke

So, Gavin, this is quite a serious issue. What can charities, what can the trustees do to protect themselves?

Gavin McEwan

They have to maintain an awareness of the law, keep up-to-date with regulatory changes, ideally have some training and induction processes in place for charity trustees, and refresh those processes from time-to-time, and seek advice when required.

David Clarke

Gavin, Chris, thank you very much. So, for more information on how Turcan Connell can help you and your charity, go to turcanconnell.com.