The SRA has revealed it is applying to move to charitable status as it continues working to establishing itself as a distinct entity from the Law Society.
In a paper presented to the board last month, the regulator confirmed it has taken advice from charity lawyers and accountancy firm KPMG about the feasibility of becoming a charity. Current advice indicates any application to the Charity Commission for registration is ‘likely to be strong’.
The SRA says such a move would allow it to take advantage of its new identity as a separate entity ‘with our own legal personality’, as well as strengthening its accountability through compliance requirements of the commission.
Becoming a charity also allows the SRA to take the benefit of tax relief available to charities and in particular to reduce the cost of the Solicitors Qualifying Exam for candidates by avoiding the need to add liability for VAT to the fees. Tax benefits, it is claimed, would also reduce the overall cost of regulation for firms and solicitors across the board.
Following agreement in principle by the Law Society Council last year, the SRA has been working to set itself apart as a distinct corporate entity which is a wholly owned subsidiary of TLS.
The SRA had previously agreed to establish a charitable subsidiary to deliver the SQE and created SRA Assessment Limited (SRAAL) to achieve that purpose. From there, the idea to establish SRA Ltd itself as a charity has developed.
The SRA says it has considered a number of challenges to the proposal but found no significant issues or barriers. The Charity Commission would not wish to interfere in regulatory activities but would be concerned only about any matters that impact on the SRA’s charitable status.
There might also have been an issue with members of the SRA board currently being paid for their role, but the commission’s guidance is that trustees of a charity – effectively what board members would become – can be paid a reasonable amount for their services where it is in the charity’s best interests.
The paper says the Law Society is ‘supportive of the direction of travel’. The application for registration of SRA Ltd is likely to be submitted as soon as possible and no later than next month.