The tax issue
CVTs reason for controversial changes not inevitable
On 13th May CVT trustees wrote a letter to Co-workers and families stating that community members will have to become employees of the trust, or leave the community. They referred to an opinion from a tax expert received a few weeks earlier that appeared to leave them no other option. Camphill Co-workers are vocational (long-term) volunteers who have been creating and living in communities with learning disabled people as intended by their respected founder Karl König and described in the charity’s founding document (LINK), and in line with the legal opinion of Peter Trevett QC (LINK) and a more recent agreement with Her Majesty’s Revenue and Customs (HMRC, LINK). It therefore came as a great surprise to communities that the way they have been living for many years is now being presented as potentially illegal by their own charity. On the other hand, we feel that if there has been a departure from the traditional Camphill way of life in certain aspects, there is no doubt that this could be corrected.
Camphill communities are usually self-managing communities with a local management committee (LMC). However, the trust's chief executive has stood down all LMCs and imposed his own managers to take charge of communities around 2011. Instead of self-managing they are now being managed and centrally controlled, which could potentially imply that Co-workers are more like employees. The irony is that this already unwelcome situation created by CVT itself should now be the reason for the unwelcome next step of making all co-workers employees – a circular argument. We would have thought it more logical and in line with the charity’s principles to work with Co-workers and stakeholders to correct any variance and ensure communities remain in line with the agreement.
CVT claims on its website: "A review of the legal advice made it clear we had no choice if we want to stay within the law and follow the Charity Commission instructions but to move co-workers to employees." We believe, however, CVT did have a choice, and it chose to continue its course of making all co-workers employees. The Charity Commission had asked CVT to address the level of co-worker benefits. Their letter to CVT dated 25 October 2013 clarified that “the commission is not saying that the benefits would necessarily equate to a paid person. This is because the co-workers are volunteers whose needs are met, rather than a range of benefits equivalent to an employee. Financial support for co-workers is entirely the prerogative of the Trustees.” Their letter dated 13 November 2013 confirmed that trustees have a wide powers and discretion to meet co-workers needs.
More recently, CVT requested a legal Opinion from a tax lawyer, which they received on 26 April 2014. Already by 13 May 2014, two and a half weeks later, CVT had made the historic decision to end the traditional co-worker culture that built this glorious charity, and sent out letters to all co-workers and families including a pack of background information and FAQs. From the start, CVT has declined to share the contents of this tax Opinion with others and thereby prevented an informed debate. They did offer one Co-worker to read it once under strict conditions which he declined as he lacked the expertise in tax legislation to make a reliable judgement and become responsible for the outcome of this dispute. Nonetheless, and quite unfairly in our view, CVT has since told the public that they have offered to share their opinion.
A leading charity lawyer commented on CVT's continued resistance to sharing their Opinion: "Arguments about non-disclosure of Opinion are varying and bear a regrettable appearance of speciousness. Why cannot the Trustees in the interest of their beneficiaries (in the eleemosynary sense) at least say what are their fears in relation to tax and quote at least any authorities said to subvert the previous conclusions of the Trevett Opinion?"
We may never know what the exact contents of their Opinion are, but we know that other Camphill communities such as the Mount in England and others in Scotland are succesfully self-managing with Co-workers just like Botton and they are compliant with legislation and the HMRC (Scottish communities are also under the same HMRC jurisdiction). Furthermore, the Chairman of the Association of Camphill Communities (AoCC, LINK), the umbrella organisation for all UK Camphill communities, confirmed on 2 October 2014:
“At this juncture, we can confirm that we have obtained independent professional advice on behalf of the Association that supports the continued implementation of the existing HMRC Agreement with regard to the taxation of co-workers.”
It is painful to realise that the Camphill Village Trust, the charity that created the first Camphill community in Botton, is no longer advocating for the non-contractual Co-worker model in Botton, Delrow, Oaklands Park or the Grange, the model so popular with its beneficiaries and their families alike and clearly described in the charity memorandum by which trustees must abide. Rather than protecting the co-worker model CVT itself has become the driving force in eliminating it. Had CVT supported Co-workers in obtaining their own opinion for Botton, as they requested, or involved them in a fair debate to find a solution of mutual benefit, the last few months would have been a very different experience. They could have been a productive phase that brought honour to the charity rather than unhappiness to the people living in its communities; a phase of intense work and discussion with all Co-workers, parents and villagers, with the aim of describing a set of rules that allow shared Camphill households and communities to thrive and adhere to agreements with HMRC.
Trustees could have shown wise and inclusive leadership and opened this historic decision-making process with a statement like: “After a period of intense work focused on implementing the requirements of regulators and commissioners since 2011, and establishing a platform of partnership working between trustees and Co-workers, we are now facing another serious challenge as we must address a risk we have identified with a tax report we have just obtained. This suggests that Co-workers could technically be seen as employees, which might make us liable to tax payments. We have two options. Option 1 would be to turn all Co-workers into employees and notify HMRC of our intention. Option 2 would be to remind us of the existing tax-agreement and make sure that all Co-workers live and act in line with the practices outlined in it, for example with regards decision-making in our communities. We could ask the Association of Camphill Communities to assess Botton and advise us whether any corrections may be needed. We need to ask ourselves which option best serves our beneficiaries and objects as specified in the memorandum and how we can best continue creating the Camphill impulse and fulfill our mission into the future. Options 1 and 2 take us into different directions; this is a historic juncture and we ask all stakeholders to work hard with us and act responsibly, so that we can arrive at a shared decision that we will stand by when celebrating our 60th Birthday in a few months’ time. This is also a question of what kind of organisation we want to be: do we want centralised control with directions given to employed staff by managers, or inclusive and democratic decision-making by community members who are responsible and accountable?”
We would assume the latter, Option 2, as Camphill is known for a practice of consensus and community-based decision making, and the Memorandum states that
“Rigidity in the matter of control should be avoided and the closest liaison should be maintained between all those responsible for the administration of the Charity and its community or communities in their everyday life.”
Co-workers feel that CVT trustees have betrayed the trust and partnership that they tried to build with them; CVT then stripped them of their local management roles; CVT still avoids fair and open debate of this key question and possible alternatives; CVT has disempowered communities and taken full control. This crisis, so painful and disturbing for all those in and connected with this great charity could have been avoided, and could still be resolved if CVT trustees shared their ‘secret opinion’, or allowed Botton to get its own, or began a genuine process of shared decision-making looking at the options openly, options more in line with Camphill values. However, trustees have not responded to the pleas by Co-workers and families to that effect and are rigidly sticking to their course regardless.
Further reading on the tax and employment debate:
CVT's false claim that "Co-workers are breaking tax rules"
CVT's misinformation corrected