Charity Commission opens new statutory inquiries

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Charities in default of their reporting obligations

The Commission has opened a class inquiry into charities that are 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.

Charities should note that failure to submit annual documents to the Commission is a criminal offence.  The Commission also holds the view that non-compliance is often associated with wider mismanagement and poor governance, including the misapplication or abuse of charitable funds.

The Commission is starting by looking at charities with a last known income over £500,000.  The Commission has issued a formal legal direction to trustees, ordering them to meet their reporting requirements within a set period of time.  The Commission has also put the trustees on notice that, if they fail to comply, it may make a referral to the police for criminal prosecution.  In addition, the Commission says it may exercise its legal powers to appoint an interim manager of the charity to secure compliance and seek to recover the costs from the trustees personally.

Manor Residents Association

The Commission has opened a statutory inquiry to “examine various regulatory concerns including the apparent significant risk to, and potential loss of, the charity’s funds or other property; whether, and to what extent, there was mismanagement or misconduct on the part of the trustees, in particular, financial mismanagement and/or serious governance failures; and whether, and to what extent, the trustees have discharged their legal duties as charity trustees.

This follows the result of an employment tribunal ruling against the Hartlepool charity which raised regulatory issues.

Africa Relief Trust

The Commission has opened a statutory inquiry to “examine regulatory concerns including whether the charity trustees have properly discharged their trustee duties when making decisions to enter into tenancy agreements and occupy those properties to further their charitable purposes and whether any benefit to the landlord or other parties is incidental to that”.  This relates to the High Court’s decision in Public Safety Charitable Trust v Milton Keynes Council to deny business rates relief where a charity does not actually use the premises for charitable purposes for the public benefit.

The Spiritualist Association of Great Britain (formerly The Marylebone Spiritualist Association) Limited

The Commission has opened a statutory inquiry to “examine whether, and to what extent, there was mismanagement or misconduct on the part of the trustees. This will include whether the trustees complied with their legal obligations and fiduciary duties as trustees when disposing of a charitable asset.”

Christ Embassy

The Commission has opened a statutory inquiry to “examine the regulatory concerns raised and determine whether there has been any mismanagement or misconduct on behalf of the charity trustees; to establish whether charitable funds have been properly applied and to take appropriate remedial action if necessary.”

For more information please contact Chris Hook on 0191 211 7929.