March 2016
Practice Group(s):
Government
Enforcement
Global Government
Solutions
The European Union Referendum: Could your
Business be a Campaigner?
By Piers Coleman and Charlotte Wright
Understanding constraints on spending and reporting requirements during
the EU referendum campaign
The date for the much-anticipated European Union referendum has now been set for 23
June 2016 1. You may be thinking about how the outcome might impact your business –
but what about the campaign itself?
The rules governing the referendum and the campaign preceding it are provided for by
the European Union Referendum Act 2015 (“the EU Act”), which came fully into force
on 1 February 2016. Along with relevant sections of the Political Parties, Elections and
Referendums Act 2000 (“PPERA”), as amended by the Transparency of Lobbying,
Non-Party Campaigning and Trade Union Administration Act 2014 (“the Lobbying
Act”), the EU Act sets out the rules for the referendum. (The Lobbying Act does not
have direct impact here, but we have set out our thoughts on the implications of the Act
for non-party campaigning in a previous Insight published in late 2014).
Together, these Acts govern not only who may vote in a referendum, but also how much
those campaigning for one result or the other may spend to promote their cause, from
whom they may receive donations and loans, and what they must report to the Electoral
Commission. In particular, it is an offence to spend more than £10,000 on regulated
campaigning activities unless you register with the Electoral Commission. The rationale
behind these requirements is the need to ensure fairness and transparency in the
campaigning process.
What constitutes campaigning can encompass a range of ordinary business activities, so
these rules may catch individuals, businesses, charities and other organisations that
would not ordinarily consider themselves political. We will focus in this note on the
implications for businesses whose activities convey a soft political message and what
they must do to avoid falling foul of the law in the run-up to the referendum.
Is my business subject to the campaigning rules during the EU
referendum?
If a company supports an issue upon which either the “remain” or “leave” campaign takes
a stance then it is possible it will need to register with the Electoral Commission to
become a “permitted participant” – or, put more simply, a registered campaigner. Since
the effect on businesses of choosing to remain in or leave the EU is one of the
cornerstone debates in this referendum, it is likely that businesses will take a strong view
and may wish to publicise their stance - on their website, via social media or in a
newspaper, for example. The same would apply to other referendum issues that a
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This date is still referred to by the Electoral Commission as the “proposed” date for the referendum, as is the date
for commencement of the referendum period of 15 April, because the dates are subject to the conclusion of final
debates in Parliament.
The European Union Referendum: Could your Business
be a Campaigner?
business might feel strongly about – sovereignty and immigration spring particularly to
mind.
However, by promoting its views, a company may inadvertently be carrying out regulated
campaigning activities and incurring referendum expenses that may require it to register.
Further, once registered, it will be required to comply with various reporting and other
obligations.
What are referendum expenses and how might I be incurring them?
Referendum expenses are expenses incurred in connection with promoting or procuring
a particular outcome in the referendum.
The following are a few illustrations of activities in respect of which referendum expenses
may be incurred:
• Advertising
For example, signing an open letter published as an advertisement in a national
newspaper that advocates staying in or leaving the EU
• Provision of services or facilities in connection with dealings with the media
For example, providing a venue for a press conference
• Provision of unsolicited material addressed to voters
For example, paying for the production of leaflets or flyers
• Rallies and other events (including public meetings) to obtain publicity for a
campaign
For example, subsidising or co-sponsoring an event or conference in support of a
referendum issue or providing a venue for, or staffing, an event
The definition of referendum expenses covers not just the cost of, for example, placing
an advertisement, but associated costs such as the time taken to write it, agency fees
and design costs.
What should I look out for to assess whether I am incurring referendum
expenses?
With reference to the EU Act, the expenses set out above will be regulated if they are
incurred for referendum purposes, that is, if they are incurred:
i.
in connection with the conduct or management of any campaign conducted with a
view to promoting or procuring a particular outcome in the referendum; or
ii.
otherwise in connection with promoting or procuring any such outcome.
The Electoral Commission has not yet published any guidance to elaborate upon how it
will determine whether spending is incurred for referendum purposes, but it is expected
to do so quite soon.
Therefore, if you intend to promote or procure a particular outcome by taking certain
action or producing certain material, that activity will count towards your spending limit for
the referendum. It is also possible that certain activities could be considered to be
referendum expenses even where you do not deliberately seek to promote or procure a
particular outcome – that is, it may suffice if someone would think that was your intention.
We will know more when the guidance on referendum spending is published, and that
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The European Union Referendum: Could your Business
be a Campaigner?
may well provide useful colour to the strict wording of the EU Act, which is currently all
that we can rely on.
If spending is incurred before the referendum period commences, on 15 April, that
spending will count towards the £10,000 limit if the goods or services paid for are used
during the referendum period, so it is important to be cautious even prior to that date. If
you have concerns about spending that you anticipate incurring between now and the
referendum date of 23 June – perhaps by subsidising an event, or providing a venue –
you should consider:
• whether, in the ordinary course of things, you would charge for the service you are
providing
• whether the fee which you have agreed is one that you would charge a customer in
the market place
• the perspective of the person who gets a leaflet through his door or an email into
her inbox, advertising a “remain” or “leave” event at your business’s premises.
Would that person think that you were a sponsor or a contributor? If so, it is
possible that the service you are providing could be a referendum expense.
You should also be cautious about whether you may be caught indirectly; for example, if
you second staff to a client and their role involves them taking a public stance in the
campaign, you should consider whether you are thereby incurring referendum expenses.
Am I eligible to register?
Any company registered in the UK that is incorporated in the EU and that carries on
business in the UK is eligible, as are a number of other types of body including trade
unions, building or friendly societies, or unincorporated associations carrying on the
majority of their business in the UK.
If a business is not eligible to register, then it may not spend more than £10,000 on
referendum campaigning.
Do I need to register?
Any organisation conducting any of the activities specified above is a campaigner for the
purposes of the referendum. Campaigners must register with the Electoral Commission
if they expect that they will spend more than £10,000 on regulated campaigning activities
(i.e. incur referendum expenses in excess of £10,000) during the referendum period. A
campaigner must register before it spends more than £10,000; it is a criminal offence to
spend over £10,000 without registering.
It is important to be aware that the definition of referendum spending is not limited to the
payment of cash for goods or services; a notional value will be applied to any goods or
services that you provide at below market price. With some allowances, the notional
value applied will be what you would ordinarily have charged for those goods or services
in the market place. So, if you offer to provide staff to an organisation campaigning in the
referendum, either for free or at a reduced price, the usual market cost that you would
ordinarily charge to staff that event would count towards the £10,000 threshold just as it
would if you had actually charged for it.
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The European Union Referendum: Could your Business
be a Campaigner?
Are there any other consequences of registering?
Registering as a campaigner confers benefits and responsibilities, including:
•
spending limit above £10,000
o however, note that there is a maximum spending limit even for a registered
campaigner of £700,000 and it is an offence to exceed that limit
• access to the UK and Gibraltar electoral registers
• responsibility for recording and reporting certain donations, loans and referendum
spending:
o all campaigners spending over £10,000 must submit a return to the Electoral
Commission within three months following the date of the Referendum. Those
spending more than £250,000 must have their return prepared by a qualified
auditor
o if a registered campaigner spends less than £10,000, and even if it spends
nothing, it must still submit a declaration that it incurred less than £10,000
o there are also rules in relation to any donations or loans received by registered
campaigners. You must ensure that any donation or loan you receive with a
value of over £500 is from a “permissible” source and any donations or loans
received to a value of more than £7,500 must be reported to the Electoral
Commission. If no such donations or loans are received by a registered
campaigner, it must nonetheless declare that in its return.
What are the consequences if I don’t comply?
It is a criminal offence to incur referendum expenses of over £10,000 if you are not
registered as a campaigner and knew that expenses were being incurred on referendum
campaigning in excess of that limit. In this event, both the individual who authorised the
expenses to be incurred on behalf of your organisation, and your organisation itself, will
be guilty of an offence. The offence carries a maximum penalty of 12 months
imprisonment, a fine or both.
It is also an offence, when registered, to exceed the higher spending limit allotted to you.
This offence is punishable by a fine.
Other offences under PPERA that apply to registered campaigners include making a
false declaration to the Electoral Commission, failing to meet reporting obligations and
failing to include certain information on campaigning material. The penalties vary from a
fine of up to £5,000 for offences relating to failures to meet reporting requirements, to a
maximum of 12 months imprisonment and a fine for making a false declaration.
When do the rules come into force and what should I be doing now?
The EU Act came fully into force on 1 February 2016 and campaigning parties have been
able to register with the Electoral Commission since 1 February; indeed, a number have
already registered.
As mentioned above, even spending incurred before 15 April may count towards the
£10,000 limit, so you should be keeping spending under review. There are also
requirements to report certain donations and loans received in advance of 15 April.
Those who have registered or who may need to register in due course must keep
accurate records of all donations and loans with a value of over £7,500 provided towards
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The European Union Referendum: Could your Business
be a Campaigner?
their referendum campaigning from 1 February 2016 onwards. Such items must be
reported in “pre-poll reports” by certain deadline dates.
How do I register?
You can register as a campaigner online at PEF Online or complete and return Form
EUR1, which can be downloaded from the Electoral Commission website.
What next?
The Electoral Commission will continue to issue guidance for campaigners in the run up
to the referendum. We will publish updates as the guidance becomes available. Should
you require advice about whether you are conducting campaigning activities, registering
with the Electoral Commission or any related issue please contact the authors.
Authors:
Piers Coleman
piers.coleman@klgates.com
+44.(0)20.7360.8206
Charlotte Wright
charlotte.wright@klgates.com
+44.(0)20.7360.8107
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