APPENDIX 1
Supplementary memorandum submitted by
the Charity Commission
Question 30: The number of Complaints turned down
because they are out of time?
The specification of the Independent Complaints
Reviewer's (ICR) role and function provides that she will not
normally investigate complaints received more than three months
after the conclusion of the Commission's internal complaints procedures.
She retains, however, a degree of discretion to take account of
exceptional circumstances. To date she has declined to investigate
three cases on the grounds that they are out of time. Of the three
declined, two related to cases considerably predating the introduction
of the ICR arrangements. The Commission will continue to keep
the operation of the three month limit and of the ICR arrangements
as a whole under review.
Questions 40-50 and 65-68: The four year trigger
point at which potentially inactive charities are referred for
examination and whether this would occur where a register update
but not an annual return and accounts had been submitted (or vice
versa); or whether in such circumstances the trigger would be
disapplied?
Submission of register update forms by charities
is not a statutory obligation. Submission of Annual Returns and
accounts is a statutory obligation only for charities with annual
income or expenditure above £10,000. All charities receive
a number of reminders (at least two) in relation to any financial
year for which neither submission is received. In addition, charities
with annual income or expenditure above £100,000 that do
not submit a statutory Annual Return and accounts are referred
to an enforcement team.
From charities with annual income or expenditure
between £10,000 and £100,000, the Commission continues
to seek statutory Annual Returns and accounts in respect of each
financial year, via the reminder process referred to above, whether
or not a non-statutory register update for that year has been
received. It does not pursue the non-statutory register update
from charities in this category if the statutory Annual Return
and accounts have been received.
The four-year trigger (reference of charities
from which nothing has been received for four years to a team
which checks whether the charity is inactive) does not apply where
a submission, either statutory or non-statutory, has been made
within the past four years indicating that the charity remains
active.
Questions 112-117: The Commission's powers to
prevent a charity under investigation for irregularity shutting
down, and the number of cases where charities had successful or
unsuccessfully shut down in such circumstances?
For reasons explained below, it is unlikely
that a charity subject to a section 8 inquiry could succeed in
dissolving and deregistering without the Commission's agreement
in order to frustrate the inquiry. If, hypothetically, they were
to achieve this, the trustees would still remain responsible for
their actions during their trusteeship. The Commission would be
able to continue to pursue breaches of trust and other outstanding
issues, including financial restitution where appropriate. The
police and tax authorities would remain in principle to take action
in respect of criminality or tax evasion.
Charities normally have the power to wind up
on their own authority only if their governing documents contain
a power of dissolution, although they may come to an end by applying
all their assets. Whether or not a charity has a power of dissolution,
the trustees are under a statutory duty to inform the Commission
if it ceases to exist. In addition, statutory provisions forbid
charities that are companies from amending their memoranda and
articles of association in such a way as to render them non-charitable
unless they have obtained the prior written consent of the Commission.
Before removing from the Register a charity
that is exercising a power of dissolution or has applied all its
assets, the Commission seeks evidence that the assets have been
properly disposed of in furtherance of the charity's objects.
A charity which was under investigation under section 8 of the
1993 Act, and which was purporting to have exercised a power of
dissolution or applied its assets without prior agreement with
the Commission, would clearly come under extremely close scrutiny
at this point, and there would be opportunity for outstanding
questions, whether concerning assets or other matters, to be pursued.
In any case, where it became apparent that a
charity might be seeking to dissolve or apply its assets in order
to frustrate an inquiry under section 8, use of a number of the
Commission's protective powers might, depending on the circumstances,
be appropriate. They include powers to suspend or remove trustees,
or to appoint additional trustees; to appoint a Receiver and Manager
to manage the charity in the place of the trustees; and to freeze
bank accounts and make orders not to part with property.
Dissolution of a charity is on occasion an appropriate
outcome of a section 8 investigation, and takes place in some
cases at the Commission's instance or with its agreement. The
Commission has not, however, been able to identify from records
or from the recollection of case managers any cases in the past
two years where a charity subject to a section 8 inquiry has closed
down without the Commission's agreement or has sought to do so.
The Commission would be glad to look into any specific circumstances
that may have given rise to Members' concerns on the point.
Mr John Stoker
Chief Charity Commissioner
Charity Commission
December 2001
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