MPs call for charity law overhaul

MPs have called for an overhaul of charity regulations to tighten up the rules and regain public faith in the system.

The method for assessing charitable status – the public benefit test – is “critically flawed”, the Commons Public Administration Select Committee warned.

Nevertheless, although the legislation is unsatisfactory the MPs said they were unhappy about how the Charity Commission interpreted it.

They criticised the watchdog for the way it pursued costly legal proceedings against schools and other organisations after inadequately applying the law on what constitutes a charity.

The committee called on the Government to redefine the Charity Commission’s remit so that its core task is regulation of the sector.

And it said there needs to be better collaboration between the watchdog and HMRC in order to combat the “intolerable” abuse of charitable status for the purpose of tax relief.

However, it was acknowledged that the extent of the watchdog’s powers will inevitably be limited in the absence of additional Government funding.

Charities received £9.3 billion in donations in 2011/2012 and the Charity Commission receives approximately 25 new applications for charitable status every working day.

IBB’s specialist charity lawyers have a wealth of experience in delivering practical commercial advice to charities and not for profit organisations and those who work with them. Contact our charity law team here, call 01895 207809 or email charities@ibblaw.co.uk.