The net is closing in

Many registered providers may be thinking there are no more surprises to come from changes to regulation. However, charitable industrial and provident society registered providers will need to be on their toes for a new role the Tenant Services Authority is looking to acquire.

Currently, charitable IPS’s are ‘exempt charities’ and so they are not actively regulated by the Charity Commission. In essence, they just demonstrate their charitability to HM Revenue & Customs for tax purposes.

The Charities Act 2006 aims to address such anomalies and ensure all charitable organisations are regulated to ensure they are only undertaking charitable activities. ‘Principal regulators’ will be appointed for some exempt charities where there is already an existing regulatory relationship to avoid the burden of dual regulation. Such exempt charities will need to provide the same level of information as registered charities and principal regulators will assess their compliance with charity law and check whether trustees are complying with their charity law obligations.

How does this affect registered providers?

The TSA has stated in the new regulatory framework that it intends to become the principal regulator for charitable IPS’s which are also registered providers. We welcome these proposals to avoid dual regulation, which charitable companies limited by guarantee and registered providers currently experience from both the TSA and the Charity Commission. However, the TSA will need to grow its own expertise in-house if it is to effectively regulate this area of law.

The TSA has already confirmed it will undertake a consultation exercise about its proposed position as principal regulator. We will be looking for a common approach agreed between the regulators in terms of answering some of the more common charity law questions and also understanding when the TSA may ask the commission to step in, investigate or intervene using the commission’s increased powers under the Charities Act.

Preparing for change

Charitable IPS registered providers should plan to make sure there are no surprises when the TSA comes knocking. After all, charities are supposed to comply with charity law whether or not they are being actively regulated and non-charitable trading can produce unexpected and large tax bills.

In our experience, the most common areas where regulated providers slip up in complying with their charitable obligations are:

• undertaking mixed use and mixed tenure developments where the level of commercial property use is significant;
• negotiating nominations agreements and choice-based lettings arrangements with local authorities so that there is no explicit consideration of whether nominated individuals meet the requisite charity tests;
• the ‘mission creep’ of day-to-day services that are then provided to the wider community when they are not actually charitable activities.

It is worth checking your activities just in case.

Peter Hubbard is a partner at Anthony Collins Solicitors

Peter.hubbard@anthonycolins.com

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