Charities Act 2011: all change on 14 March for prescribed statements in charity dispositions of land?


Briefly, it appears that the answer to this question is: no.

The Charities Act 2011 consolidates the existing charities legislation, and repeals the entirety of the Charities Act 1993. It comes into force on 14 March 2012.

It does not change the law for charities on the disposal or acquisition of land, but the numbering of the existing provisions in the Charities Act 1993 (CA 1993) which relate to such dealings with land will change. The provisions of sections 36 – 40 CA 1993 will appear at sections 117 – 129 of the new Act.

Prescribed statements (which refer to the appropriate section numbers in CA 1993) must be used in the documents completed by charities to effect the transfer of land, and guidance on the statements to be used can be found in Land Registry Practice Guide 14 (LRPG 14)

Guidance issued by the Land Registry has now indicated that it will rely on the transitional provisions of Schedule 8 of the new Act, rather than update the Land Registration Rules 2003 (LRR 2003) immediately. The transitional provisions mean that the repeal of the sections of CA 1993 under which the LRR 2003 were made does not affect the validity of the LRR 2003. In addition, there is no need for the LRR 2003 to be amended to refer to the relevant sections of the new Act.

The Land Registry has said, however, that it is going to update Land Registry Practice Guide 14.

In the meantime, trustees with transfer documents sitting on their coffee tables containing prescribed statements which refer to CA 1993 need not panic, as, thanks to the transitional provisions, new documents will not need to be prepared. However, solicitors are being encouraged by the Land Registry to start referring to the new Act in such documents from 14 March, so trustees will see the change starting to creep in, over time.


When is a letter of pledge not enough?


Well, according to a telephone conversation I had with a Charity Commission employee on the helpline today, a letter of pledge is now never going to be sufficient proof that a charity will receive more than £5,000 in income in its first year of operation for registration purposes.

I asked why this change had come about, and the answer was the Charity Commission had been told by a number of fairly newly registered charities that the funds pledged never came through from the donors. Fair enough, I suppose.

I asked when this change in approach had occurred, and was told that it was “ages ago”, and, when I pressed for more detail than this, that it must have been close to the beginning of the year.

I asked whether this change had been publicised to those assisting with the creation and registration of charities, and was told that I had missed nothing. It had not been publicised at all.

This was slightly annoying. When you’re trying to help people to set up and register charities as quickly and efficiently as possible, it seems perverse for the regulator to make such a decision but not publicise it.

Gritting my teeth slightly, and trying to find out what might now do the job of the letter of pledge, I asked whether a copy of a contract under which the charity is entitled to at least £5,000 of income in its first year of operation would be sufficient proof of income. It would. I then asked if a deed of gift by an individual, which is similarly enforceable by the charity in the courts, would also be sufficient evidence. It would.

So, it looks as though there’s more paperwork for me to prepare (and so more costs incurred for the client), and more paperwork to submit to the Charity Commission on registration. Joy…