New Year’s resolution to file on time? Why charities should avoid becoming a ‘double defaulter’

Posted: 02/01/2025

The Charity Commission has sharpened its focus on charities that fail to submit accounting information within statutory deadlines. All registered charities must provide information annually. The rules vary according to the charity’s size and structure.

The regulator states that ‘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’. The Charity Commission will open statutory class inquiries under section 46 of the Charities Act 2011 into charities that are in default, having failed to file their annual documents for two or more years in the last five years, and meet certain criteria.

A pre-inquiry stage carried out by the Charity Commission will include the issuing of a final warning to charities that they will be placed into an inquiry if they fail to submit outstanding annual documents by a specified date. If the charity then complies with the deadline for filing, no further action is likely to be taken.

Where an inquiry is carried out, it will address the charity trustees’ misconduct and/or mismanagement, and how to remedy the non-compliance in connection with the statutory deadlines. As a result of the Charity Commission’s scrutiny of the charity and the actions of the trustees in question, other regulatory concerns may be identified and followed up.

Where the Charity Commission identifies additional serious regulatory concerns, they will be referred for further consideration and investigation under a separate inquiry. A very recent example concerns the Order of Friars Minor Conventual charity, where the Charity Commission escalated its engagement with the charity to a statutory inquiry after trustees repeatedly failed to file accounts or conduct a review of the charity’s accounting processes. It will now review the trustees’ statutory accounting and reporting responsibilities and the adequacy of their oversight of the charity’s operations more generally. 

It is important for trustees always to remember that providing timely, accurate and clear financial information that helps funders, donors, beneficiaries, and others to understand the charity and its work, will ultimately encourage trust and confidence in it. More than this, it will help demonstrate to the regulator that the charity is well-run and fully aware of its statutory obligations, and in so doing, avoid the spotlight of an enquiry.

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