Comments from ACCA to the Charity Commission, July 2012.
Q1. Is there other information we should collect?
Q2. Is there other information we should display?
Yes, in two regards.
If an entity has existed and operated prior to being registered as a charity, then they should be able to file their pre-registration accounts on the Charity Commission’s register if they choose to do so. It is helpful for users to get information to understand a current charity in comparison to the scale and range of activities that were done previously. A direct link could be useful to users to be able to access easily the relevant earlier financial statements.
We also consider that charities should be able to enter a link to their own website on the Commission’s register, again for ease of access by users to further information.
Q3a. Would it be helpful to show details if a charity is formed from a merger?
Yes. This information is helpful in order to understand better how the current activities have developed in comparison to the past as noted above.
Q3b. Would it be helpful to show details where a new charity is registered because of the incorporation of a previous one?
Yes, for the reasons noted above.
Q4. Should there be a link to the charity’s governing document on its register entry?
Yes. This would not only be helpful for external parties, but it would help emphasise on the induction of new trustees the importance of understanding the objectives that the charity was intended to carry out. Equally it would help stress the need to keep the requirements of the governing document in mind when questions arise about the future development of the activities of the individual charity.
Q5. Do you have any comments about the current thresholds for registration or submission of documents?
We consider the current threshold structure for charities to be rather complicated. We note there seem to be a number of income thresholds for different requirements of registration, reporting and assurance, reckoning at least that incomes exceeding 5, 10, 25, 100, 250, 500, thousands, or 1 million pounds, could trigger changes in the requirements. We accept that these thresholds are trying to be responsive to estimates of user needs and the burden of compliance for preparers, but in our view there is a case for simplifying these by aligning the different changes. This would be with the aim of making the different regimes better understood and applied. We intend to consult further with our members on this and get back to you at a later date with more specific ideas.
Q6. Should all charities which claim tax reliefs be required to register?
No. We see the requirement to register as an obligation to be accountable to the public because of funds that may have been raised from the public and because the charity registration gives greater credibility in many other ways to charities. We do not see in principle that registration should be the price to pay for tax reliefs.
We do not think that excepted charities or those currently below the £5,000 threshold should be denied tax reliefs on the grounds that they have not registered. If there are concerns about the accountability of those which do receive Gift Aid for example, then there may be a case for HMRC to publish the details of those bodies not registered by the Commission which are nonetheless approved to obtain such tax reliefs.
Q7. Should charities update details on-line rather than wait for the annual return?
Yes. In principle charities should be obliged to keep the register up to date in these regards and thirty days may well be an appropriate deadline for informing the Commission. However we recognise that completing the Annual Return is a helpful reminder and so should be continued in tandem with a general timely notification requirement.
Q8a. Do you agree that charities should have the opportunity to put additional information on the register?
Yes. As noted above there could be links in the register entry to the charity’s own website and to pre-registration financial statements.
Q8b. Do you think the Annual Return should include any questions which can be answered voluntarily?
No. There should be clear requirements for disclosure of common information. Voluntary answers are likely to reduce the comparability between charities. An answer, or most particularly no answer, to voluntary questions may be difficult to interpret.
Q9. Should the option be explored of informing HMRC of late filers so that they can suspend Gift Aid?
No, except in extreme cases. As noted above filing public information and the receipt of tax benefits should not necessarily linked. Removing the Gift Aid recovery tends immediately to damage the interests of donors and beneficiaries, neither of whom are responsible for late filing. The Commission should be responsible for enforcing its own requirements and we think there are a number of other actions that can be taken instead.
Q10. Do you agree that we should fine charities that are late in filing their accounts?
Yes, in the same way as companies are fined for late submission. The experience with companies is that levying even modest fines has a powerful effect on changing compliance patterns. There should be a number of other actions that perhaps might be taken before that step – please see our answer to Q12 below.
Q11. Do you agree with the suggestion that we should have incentives for charities that file early?
No. We are not sure what sort of incentives might be in view, but on the whole a reasonable time should be set for filing and then charities should be expected to comply with that.
Q12. Is there anything else that we could do to increase the number of charities that file on time?
There should be a system for reminding charities by email that their returns are going to be due – with perhaps a month to go.
If the deadline is missed then there should be a modest fine imposed and compliance efforts should then be concentrated on all the individual trustees. In many cases some of the trustees may be unaware that the accounts are now overdue and delays often lie at the door of the administrative staff or particular trustees.
The existing ‘name and shame’ system involving flags on the register is good, but the Commission might consider not applying these where charities contact them and provide good reasons for late filing (for example illness of key persons or destruction of records).
Persistent failure to file accounts should be taken as a risk factor that the charity is not being run by fit and proper persons or for the public benefit. It should be a trigger for further letters to trustees to that effect and perhaps grounds for alerting HMRC or for investigations by the Commission itself. Deregistration remains the ultimate sanction.
Q13. Is the current content of the SIR helpful in informing the public about the work and performance of larger charities?
Yes, but it potentially duplicates what is provided elsewhere.
Q14. Which of the options for the SIR would you prefer and why?
The information contained in the SIR should be required in the trustees’ reports of those charities to the extent that it is needed. If that is done then SIR would be a duplication and should be discontinued. In other words we support option (c).
Q15. Which of the suggested information about a charity is most important to collect?
The most significant potential pieces of information seem to be:
This is because these are what stakeholders will find most useful. The first would provide a place to access more information about a charity’s activities and a place to raise any issues concerning the charity in addition to the Commission itself. The gift aid registration might help in the decision of a donor to make a gift and in the completion of tax returns.
Overseas activities and the ownership of property are both suggested. We would expect this information to be disclosed in the trustees’ report if it was material and so see no reason to include it a specific additional requirement.
If for particular charities overseas activities were seen as a particular source of risk by the Commission then further information could be requested from them.
We are not sure why the existence of a complaints policy should be significant to the public. Trustees are ultimately responsible for the proper management of the charity to deliver public benefit. If there are perceived problems with any aspect of that the public are already provided with names of trustees and a contact address.
Q16. Is there additional information you would like us to collect and make publicly available?
Yes, we highlight two items.
In line with the membership of umbrella bodies noted above, there should be a note of any other regulators to which the charity is subject – such as the Care Quality Commission or OFSTED for example.
Information about other trusteeships that a trustee may hold is required. This should be extended to other directorships that a trustee may hold.
Q17. Is there any information currently collected in the annual return, that we should stop collecting?
No.
Q18. Is it helpful to display information about charities that have been removed from the register?
Yes. As noted above in answer to Q3, the merger or reformation of charities in other legal forms can be complex to unravel. Retaining information about deregistered charities can be an essential component to help that process.