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The voice of Scotland’s vibrant voluntary sector

Published by Scottish Council for Voluntary Organisations

TFN is published by the Scottish Council for Voluntary Organisations, Mansfield Traquair Centre, 15 Mansfield Place, Edinburgh, EH3 6BB. The Scottish Council for Voluntary Organisations (SCVO) is a Scottish Charitable Incorporated Organisation. Registration number SC003558.

Changes to Scottish charity regulations: what you need to know


Louise Smith tells how new regulations will affect changes to the accountability of Scots charities

Charities are at the heart and soul of our communities. Whether you use them for direct support, are employed by them or give philanthropically to help them meet their goals, no one can doubt their importance. 

However, when it comes to regulation, as an entity of public interest, charities must be reputable, professionally compliant and prepared to be subject to increased external scrutiny. 

In Scotland there are currently over 25,000 registered charities, from small play groups to large environmental organisations. Whatever their size, the same rules still apply to all charities, and trustees must not only adhere to them but also their governing document.  

Regulation of Scottish charities has fallen behind that of the sector in England, Wales and Northern Ireland, where changes to update charity legislation have already taken place. 

The need to bring Scotland in line was raised by independent body, the Office of the Scottish Charity Regulator (OSCR) and, as a result, The Charities (Regulation and Administration) (Scotland) Act 2023 was introduced. This means changes are afoot in 2024 - and charities must be prepared. 

The Bill: 

  • gives OSCR wider powers to investigate charities and charity trustees 
  • amends the rules on who can be a charity trustee or a senior office-holder in a charity 
  • increases the information that OSCR holds about charity trustees 
  • updates the information which needs to be included on the Scottish Charity Register 
  • creates a record of charities that have merged 

It will no longer be necessary for OSCR to redact names of trustees and independent examiners from reports and accounts and they will also publish a list of trustees whom the courts have removed and barred from acting as trustees in the future. 

New annual return questions will be asked of all charities with a financial year ending on or after November 30, 2023, including some relating to a charity’s accounts.  

The provisions of the Act will be brought into effect through two commencement orders, the dates of which have yet to be announced, but it is expected to be phased in over a period of two years with the simpler changes expected to take effect from Spring 2024. 

But even bigger changes will come in 2025 once the new SORP - the Charities Statement of Recommended Practice - comes into force. The draft of this is expected imminently.   

The Charities SORP provides guidance to those who prepare charity accounts as well as recommendations and requirements on how to prepare ‘true and fair’ accounts in accordance with UK accounting standards. The SORP is updated from time to time to take account of changes to accounting standards and /or charity law. 

Accounts must be prepared regardless of size, although there are simplified requirements for smaller charities.  For most charities gone are the days of the 'man down the street' signing them off.  

For the simplest receipts and payments accounts, the trustees must satisfy themselves that the independent examiner has the suitable skills but for accruals based accounts it requires an independent examiner who is professionally qualified.  

If an audit is required, due to the size of the charity or its governing document, the trustees should be aware of the nature of what this involves, the time and the associated costs.  

So, what now? 

When did you last review your constitution? We recommend that trustees take stock and review the charity’s governing documents.  Are they fit for purpose?  Are there any difficulties caused by the contents of the governing documents?  Do they restrict the charities activities?  Are they still relevant in 2024?   

VAT on school fees - the Labour Party confirmed that, should they win the next general election, they would remove several tax exemptions from private schools, many of which are registered charities. Their intention is to charge VAT at 20% on private school fees, which will not only affect the schools themselves but also families who will likely see an increase in fees. 

VAT may also be recovered on costs, for example, on building or refurbishment projects carried out in the last 10 years which VAT might now be recovered on.  

The Revitalising Trusts Project - if you are a trustee of a smaller, inactive charity, you may receive a letter from The Revitalising Trusts Project. The Project aims to identify charitable funds that are lying dormant or underused and to work with trustees to reactivate them or to find new or better uses for those funds.  

If OSCR makes contact with you, we would encourage you to work with them to find the best way forward for the charity. This may be by assisting you to make improvements to the trust deed or winding up the charity and transferring funds to another charity of your choice with similar charitable aims and objectives. 

In conclusion ... as a charity trustee, it's time to act. You can no longer just be a name on the accounts. You must play an active role within the charity, be aware of your duties and responsibilities, the future changes that could affect it, the risks it faces and how to navigate the charities minefield. Be aware and be prepared. Don't risk that great work to non-compliance. 

Louise Smith is an audit and accounts manager at accountancy practice MHA



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Annie Teresa TERESA Nevin
2 months ago

I am interested to learn more on this especially Scotland