Decision

Charity Inquiry: Middlesbrough Central Masjid and Community Centre

Published 10 November 2023

Applies to England and Wales

The charity

Middlesbrough Central Masjid and Community Centre (‘the charity’) was registered on 10 September 2010. It is governed by a Trust Deed dated 1 April 2010.

The charity’s entry can be found on the Register of Charities.

The charity’s objects are:

• to advance the Islamic faith in accordance with the ahl-ul-hadith creed and methodology for the public benefit in such ways and in such parts of the United Kingdom or the world as the trustees from time to time may think fit

• to engage in general charitable activities for the public benefit in such ways and in such parts of the United Kingdom or the world as the trustees from time to time may think fit

Background and Issues under Investigation

On 9 December 2019, because the charity had failed to submit accounts and annual reports to the Commission for the financial years ending (FYE) 31 December 2016, 2017 and 2018 the Commission placed the charity into the double defaulter class inquiry. The double defaulters class inquiry is for those charities that are in default of their legal duty to file annual reports, accounts and returns for two or more years in the last five years.

The charity was removed from the double defaulters’ inquiry on 9 June 2020 following the submission of its outstanding accounting information. The trustees were provided with regulatory advice and guidance on preparing a Trustee Annual Report (‘TAR’) and submitting accounting information on time.

Despite the previous advice, the charity continued to fail to submit its accounting information on time. The Commission subsequently received the charity’s annual return for FYE 31 December 2019 on 29 April 2021 (180 days late) and the accounts and TAR for the same period was received on 30 April 2021 (181 days late). The TAR for FYE 31 December 2019 contained an incomplete summary of the main activities of the charity and there was no summary of the main achievements of the charity during the relevant year. This meant that it was not possible to have a clear picture of the charity’s activities and achievements.

The accounts filed for FYE 31 December 2019 indicated that the charity had income of £85,278. Where a charity’s annual income is over £25,000, the trustees must arrange for an independent person or accountancy firm to carry out either an audit or an independent examination of their charity’s accounts. The charity’s 2019 accounts did not have an independent examiner’s or auditor’s report included.

The charity again failed to submit its accounts for both FYE 31 December 2020 and 2021. This was despite engagement with the charity regarding the overdue accounts and the trustees being given several deadlines to file the charity’s outstanding accounting information.

On 13 December 2022, the Commission opened a second statutory inquiry into the charity under section 46 of the Act (‘the inquiry’).

The scope of the inquiry was to examine:

• the extent to which the trustees have and are complying with their legal duties in respect of the administration, governance, and management of the charity, with regard to the management of the charity’s finances, and whether the charity is operating in line with its objects

• the extent to which any failing or weaknesses in the administration, governance and management of the charity identified during the inquiry were the result of misconduct and/or mismanagement by the trustees

The inquiry closed with the publication of this report.

Findings

Compliance with legal duties in respect of administration, governance and management of the charity, with regard to the management of the charity’s finances, and whether the charity is operating in line with its objects.

A review of the charity’s accounting information for the FYE ending 31 December 2019 found that the TAR contained insufficient detail to provide a clear picture of the charity’s activities and achievements and there was no audit or independent examiner’s report.

The current trustees explained to the inquiry that they were fully aware of the charity’s shortcomings with regard to reporting requirements. The current trustees stated that they had been appointed in July 2020 and January 2023 and had taken over from the former trustees to resolve the non-compliance issues. The current trustees stated that there were many factors that contributed to the former trustees’ failure to submit the required accounting information on time which were compounded by the advent of Covid, and the restrictions put in place.   

The inquiry established that the current trustees had opened a new bank account with online access which will facilitate the provision of accounts information to the current and future trustees and auditors.

The current trustees explained that they had reviewed the existing charity policies and identified a number of shortcomings in the policies. The inquiry was provided with copies of some of the updated policies and informed of the time scale when further work on the remaining policies would be completed.

The extent to which any failing or weaknesses in the administration, governance and management of the charity identified during the inquiry were the result of misconduct and/or mismanagement by the trustees.

No accounting information was received by the Commission for the FYE 31 December 2020 and 2021 until 23 March 2023. The accounts for 2020 were 508 days late and the accounts for 2021 were 143 days late. However, the accounts for both financial years were reviewed and found to meet the reporting requirements. The charity is no longer in default.

The inquiry has concluded that the former trustees had not complied with or fulfilled their duties as trustees under charity law. There was a failure to file annual accounting information in accordance with their statutory obligations repeatedly over several years.

Trustees have a legal responsibility to ensure that the appropriate accounting information for the charity is prepared and supplied to the Commission. The former trustees’ failure to do so over a number of years is misconduct and/or mismanagement in the administration of the charity.

Conclusions

The Commission found that the former trustees were responsible for misconduct and/or mismanagement in the administration of the charity. The former trustees repeatedly failed to prepare and submit the necessary financial information.

The current trustees cooperated fully with the inquiry and the Commission is satisfied with the steps taken to prevent a recurrence of this failure.

Regulatory Action Taken

On 30 January 2023, the Commission used its information gathering powers under s52 of the Act.

Issues for the wider sector

The purpose of this section is to highlight the broader issues arising from the inquiry that may have relevance for other charities. It is not intended as further comment on the charity in addition to the findings and conclusions set out in the earlier sections of this report but is included because of their wider applicability and interest to the charity sector.

Trustees of charities with an income of over £25,000 are under a legal duty as charity trustees to submit annual returns, annual reports and accounting documents to the Commission as the regulator of charities.

Further guidance is available on our website: Charity reporting and accounting: the essentials November 2016.