Decision

Charity Inquiry: double defaulter charities between April 2020 and March 2021

Published 6 August 2021

This decision was withdrawn on 9 August 2023

This report has been archived in line with our policy as it is over 2 years old.

Applies to England and Wales

Background

All registered charities must provide information annually to the Charity Commission (‘the Commission’). The rules vary according to the charity’s size and structure. Registered charities with:

• income up to £10,000 should complete the relevant sections (income and expenditure) of the annual return
• income above £10,000, and all Charitable Incorporated Organisations (‘CIOs’), must prepare and file an annual return
• income above £25,000, and all CIOs, must also file copies of their trustees’ annual report and accounts

For further information see the Commission’s guidance on how to prepare a charity annual return.

There is public interest in the issue of charities’ non-submission of annual returns, reports and accounts (‘annual documents’), particularly where the non-compliance is over a long period of time. As a result, on 20 September 2013, the Commission opened a statutory class inquiry (‘the inquiry’) into charities that were in default of their statutory obligations to meet reporting requirements by failing to file their annual documents for two or more years in the last five years and met certain criteria, including that:

• the charities were recently (or in the case of charities that would become part of it in due course, would be) given final warnings to comply by a specified date
• on the first working day after the specified date the charities were still in default (partially or otherwise)

The inquiry periodically identifies and brings charities into it that meet the criteria and have a last known annual income over a certain threshold. In order to ensure the inquiry’s strategy continued to be risk-based and proportionate, it was updated on 1 November 2019 to consider additional factors, when deciding which charities to bring into the inquiry.

Pre-inquiry stage

Work carried out at the pre-inquiry stage by the Commission includes issuing a final warning to charities that they will be placed into the inquiry if they fail to submit outstanding annual documents by a specified date. A number of charities proceed to submit their outstanding documents within the Commission’s deadline. The impact of the Commission’s work at the pre-inquiry stage during the reporting period was that over £14 million of charitable income in respect of 23 charities is now accounted for.

Issues under inquiry

The inquiry is confined to dealing with the charity trustees’ mismanagement and misconduct and remedying the non-compliance in connection with their failure to submit the required annual documents to the Commission within the statutory deadlines.

Misconduct includes any act (or failure to act) that the person committing it knew (or ought to have known) was criminal, unlawful or improper. Mismanagement includes any act (or failure to act) that may cause charitable resources to be misused or the people who benefit from the charity to be put at risk. A charity’s reputation may be regarded as property of the charity.

Findings

During the inquiry period (April 2020 – March 2021):

• 25 charities, listed in Annex A, submitted their outstanding annual documents and continue to operate as charities. This resulted in over £8 million of charitable income being accounted for
• 19 charities, listed in Annex B, were found to have ceased to exist or do not operate and were therefore removed from the register of charities

More details about the charities listed in Annex A and B are available on the register of charities (‘the register’).

Any regulatory issues arising from the inquiry’s scrutiny of the annual documents received have been followed up with the respective charities separately.

Official Warnings

In accordance with the inquiry’s revised strategy, updated in November 2019, during the period four charities that persistently failed to submit their accounting information were issued with notice of the Commission’s intention to give them an Official Warning under section 75A of the Charities Act 2011 (‘the Act’). Two out of the four charities filed their outstanding documents following receipt of the notice, but the remaining two did not and so were issued with Official Warnings – which can be viewed on their respective entries on the register:

Compass Bridge Ltd – 1146917

Islamic Education Centre and Mosque – 1150827

The Official Warnings require the trustees to comply with their legal obligations to submit the outstanding accounting information. The Commission will consider taking further regulatory action if they fail to comply.

Conclusions

The trustees of the charities, listed in Annex A and B, were in default of their legal obligations to file their annual documents and keep their registered details up to date. The Commission regards this as mismanagement and/or misconduct in the administration of the charities.

As a result of its pre-inquiry and inquiry work during the reporting period, the Commission ensured that those charities that continue to operate complied with their legal obligations to submit their annual documents. In total, a further £22,905,885 of charitable income is now accounted for (£14,284,930 at the pre-inquiry stage and £8,620,955 at the inquiry stage).

The Commission also arranged for 19 charities to be removed from the register which it considered had ceased to exist or did not operate.

Charities ceased to be part of the inquiry when they were no longer in default of their accounting obligations and filed the missing annual documents; or the Commission was satisfied that they had ceased to exist or do not operate; or they had been issued with an Official Warning by the Commission.

Regulatory action taken

The inquiry used the Commission’s information gathering powers under section 52 of the Act 50 times during the period to order and obtain bank records and financial information of the charities relating to the years with missing annual documents. These were used in connection with the inquiry’s examination of the annual documents once they were received.

The inquiry exercised powers under section 84 of the Act 54 times during the period to direct the trustees to prepare and complete the relevant missing annual documents for the charities and provide copies of these to the Commission.

The inquiry also exercised powers under section 75A of the Act for the first time in the inquiry during this period, issuing an Official Warning to two charities.

The Commission provided regulatory advice and guidance about the trustees’ duty to file the charities’ annual documents.

Issues for the wider sector

Failure to submit the annual documents to the Commission may be a criminal offence. The Commission also regards it as mismanagement and/or misconduct in the administration of the charity.

Providing timely, accurate and informative financial information that will help funders, donors, beneficiaries and others to understand the charity and its work, will encourage trust and confidence in it.

Annex A

The following 25 charities submitted their outstanding annual documents and continue to operate as charities:

Brightlingsea Playcentre: 1026524

The Parochial Church Council of the Parish of St Laurence: 1165174

Moracha Ltd : 1084294

The Parochial Church Council of the Ecclesiastical Parish of Shere: 1138039

Community Reach: 1153409

Waterfront Sports & Education Academy: 1153993

Cylch Meithrin Maesincla: 1091149

Voluntary Schools Fund of Gloucester Diocesan Board of Education: 1043116

Middlesbrough Central Masjid and Community Centre: 1137935

Regimental Institute Seme: 1130151

The Great Commission Ministry: 1123388

Aberconwy Mission Area: 1131047

Jellybabies Ltd: 1141370

Forest Row Community Association: 1120133

The Newcastle Emlyn and District Swimming Pool and Recreational Facilities Association: 506851

Red Dreams: 1126235

Friends of Gainsborough Old Hall Association: 229837

Community Accountancy Self Help: 1091492

Cats in Crisis: 1122296

British Motorcycle Manufacturing Academy Limited: 1154016

Yeshivas Lubavitch Manchester: 513728

The Humanitarian Dialogue Foundation Limited: 1136895

Cambridge Islamic College: 1163646

Children Care Centre: 1014813

Climbing Bears of Wisborough Green: 1000438

Annex B

The following 19 charities were found to have ceased to operate and were therefore removed from the register of charities.

Oseh Chessed Trust: 1143414

The Lazarus Centre Limited: 1062589

Family Health – Isis: 1059698

Happy Hearts Fund Great Britain: 1160473

Foley House Trust: 227865

Saakar Welfare Trust: 1152683

Thomas Alleyne’s High School Fund: 1142393

Activ8 Learning: 1111626

Enfield Mental Health Users’ Group: 1096105

Stepping Stones – Stowmarket and Area Opportunity Group: 299613

Entertainment Workshops Limited: 1146124

Principles in Finance: 1137576

Hasbury School Parent Teacher Association: 1078427

Ra Trust: 1154442

Downs Visitors’ Centres Association: 1046123

Aston Springwood Home School Association: 702703

OIC Education Trust: 1156799

Swansea Bay Regional Equality Council: 1146712

East Dulwich Community Nursery Association : 288953