Public petitions committee to ask government if it plans to review Charities and Trustee Investment (Scotland) Act 2005
The Scottish Government is to be asked to consider changing the test organisations must pass before becoming a registered charity.
MSPs on the Parliament’s public petitions committee argued it was time for a rethink of the 10-year-old legislation as too many groups were “jumping on the bandwagon” of becoming a charity for tax purposes.
The committee will now write to the Scottish Government to ask whether it has any intention of reviewing the Charities and Trustee Investment (Scotland) Act 2005 which created/contains the test.
Both John Wilson MSP and Hanzala Malik told the committee they were concerned the test, overseen by charity regulator the Office of Scottish Charity Regulator (OSCR), was being abused by some organisations for financial purposes.
Malik said: “I do feel that more and more organisations are jumping on the bandwagon, it’s becoming very fashionable to become registered charities to try and somehow avoid paying various taxes and so on, and I think we really need to look at this again as a parliament, and I think it would be a good idea to suggest to parliament to do just that.”
I do feel that more and more organisations are jumping on the bandwagon, it’s becoming very fashionable to become registered charities to try and somehow avoid paying various taxes
Wilson added the anniversary afforded an “appropriate” opportunity to review it.
The discussion, which took place at the committee’s meeting on Tuesday, was a result of the debate afforded to a petition lodged by campaigner Ashley Husband Powton.
Husband Powton has called for all private schools to be stripped of their charity status.
She said the schools should fail the current test as the benefit they provide is restricted to an elite few.
Since 2007, 52 schools have sat the charity test. Forty met the test immediately, with a further 10 doing so after they took action to address concerns raised by OSCR. The other two reviews were suspended.
Speaking to the committee Martin Tyson, head of registration at OSCR, defended the test.
He said it was “fit for purpose” and “operable” but conceded if there was a wider social and political view that particular types of institutions shouldn’t be charities then minister should look at making specific provision about those.
His colleague Judith Turbyne, head of engagement at OSCR, agreed the test was “workable” but admitted strongly favouring a review.
She said: “We’re favourable in reviewing the act because we’re coming up for 10 years, we would be very pro that, but I think that has to be something that takes into accounts all different sectors into account.”
John Downie, director of public affairs, at the Scottish Council for Voluntary Organisations, said it was “definitely time for a wholesale review”.
He added: “We need to rethink the charity test and think carefully about whether private schools really earn their charitable status and its accompanying tax relief. But they are not the only group who should be up for review, we also want to see OSCR reconsider the charitable status of local authority arm’s length external bodies and universities which are patently not charities. This needs to be addressed, ministerial exemption or not.”
