OPERATIONAL GUIDANCE
SMALL CHARITIES: DISSOLUTIONS AND REMOVAL FROM THE REGISTER
OVERVIEW
OG 202 A1 – 23 April 2007
| Purpose |
This OG provided an overview of our 'fast track' approach to the dissolution and removal of small charities. |
Functional responsibility
| For action |
Charity Services |
Contents
1. Introduction to the OG 202 series
2. What is a small charity?
3. Key features of the fast track approach
4. Application of policy
5. Table outlining the fast track approach
Glossary of Terms used in this Guidance
Index to further related information
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| The Law |
Refer to a lawyer |
Refer to an accountant |
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1. Introduction to the OG 202 series |
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This series of OGs explains the "fast track" approach to be applied to small unincorporated charities when they contact us and indicate that either they intend to dissolve or they have dissolved. It can only be applied to charities who meet the requirements specified in this series of OGs. It does not apply to charitable companies, other types of incorporated charities (such as those incorporated by Royal Charter) or to unincorporated charities whose trustees have been incorporated under Part VII of the 1993 Act or its statutory predecessors. Charities that do not come within the scope of this series of OGs remain subject to the guidance in OG 17 - Removal of organisations from the Register. |
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In all cases where the charity’s last recorded income does not exceed £5,000 we must remove the charity from the Register, where requested to do so, on the basis that the registration is voluntary, following the guidance in OG 17 B4, regardless of whether the charity has the use or occupation of land or permanent endowment. This does not prevent us from making inquiries into management of the charity if we have concerns |
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2. What is a small charity? |
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For the purposes of this series of OGs, unless it owns land, a "small charity" is an unincorporated charity that has a gross annual income of less than £20,000. More detailed information on this subject, including when a charity that owns land can be considered "small", is given in OG 202 B1. |
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3. Key features of the fast track approach |
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The key features of the fast track approach are a declaration form for trustees to complete and a significant reduction in the number of instances where we raise questions about the details provided. |
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The main features of our policy for removing small charities from the Register are as follows (other charities remain subject to the guidance in OG 17 - Removal of Organisations from the Register): |
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We are flexible about the content of papers from charities that have or are being dissolved. Provided that there is clear evidence of dissolution, its presentation is not important (see OG 202 B1). |
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Small charities can apply to us for removal using our declaration form. Guidance note CSD 1344A (see OG 202 C1) and declaration form CSD 1344B (see OG 202 C2) are available under File > New > CSD, and on the website, for small charities intending to dissolve, in order to reduce the risk of insufficient information being provided and simplify the administrative process of removal. |
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While we expect trustees to comply with our guidance on the subject, we will take a pragmatic approach where the cases involving removal from the register do not strictly comply with that guidance. For example, charities with gross assets known to be worth less than our current de minimis limit from the last available accounts (received within the last five years), may be removed on application without further inquiry (see OG 202 B2). Small charities above the de minimis level can be removed if they have either: |
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complied with the terms of the dissolution clause (if any); or |
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in the absence of a dissolution provision, or purposes in the charity’s governing document that are workable, we will also accept assets being applied for purposes that are as similar in character to the purposes of the charity as is practical in the circumstances. See section 3 of OG 202 B2. Therefore we will not automatically take further action if the assets have not been applied strictly within the terms of the governing document. |
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Papers are returned (bounced back) without a case being opened where insufficient information is provided to enable the charity concerned to be removed from the Register (see OG 202 B1). |
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Letters indicating concurrence with resolutions made under section 75 of the 1993 Act advise trustees that we will remove their charity from the register unless they want it to remain, or its gross income in its current financial year is over £5,000 (see OG 201 B3). |
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The table at section 5 of this OG provides an "at a glance" overview of the procedures which apply to the different sized small charities. |
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4. Application of policy |
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Guidance on applying these key principles is contained in the other OGs in this series (OG 202 B1 - Identifying and advising small charities and OG 202 B2 -Content of papers, bounce back and case handling). The following points should always be considered when providing advice or dealing with a case involving a compulsorily registered small charity that wishes to, or already has dissolved: |
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Is the charity permanently endowed? If so, the way forward will depend on its assets and/or income (see the guidance in OG 202 B2). If it is not, then the charity can be dealt with using the full flexibility of the fast track approach given in this guidance. |
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Is the charity proposing to dissolve? If so, and it is not permanently endowed, we should refer the enquirer to our guidance (which we can print off and send to him or her) and ask them to follow it (see section 2 of OG 202 B1). |
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Has the charity already dissolved? If so, we only need be concerned if: |
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the charity has not provided us with sufficient information (in which case we return the papers under cover of a form letter (OG 202 L2); or |
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the charity was above the de minimis level and permanently endowed; or |
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the charity is compulsorily registerable and not permanently endowed and has spent the funds for purposes, which are not connected to the current purposes. If the trustees have spent them on purposes which were as similar in character to the existing purposes as were practical in the circumstances, we will nonetheless remove the charity without further question. |
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Where further action is required (because, for example, a permanently endowed and compulsorily registered charity has dissolved), we should take the same approach as we would for larger charities by establishing the facts and circumstances and deciding what steps (if any), are needed to regularise the position. |
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5. Table outlining the fast track approach |
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The table below outlines the action to be taken when a small charity advises us that it has dissolved. |
| The charity is voluntarily registered |
The charity has no interest in land and assets worth less than our current de minimis limit |
Charities with assets worth more than our current de minimis limit but less than the limits referred to in section 1 above |
| Charity still has interest in land |
Charity has permanent endowment |
Charity has clause in its governing document that directs how it may be dissolved |
Charity has no permanent endowment and no power to dissolve in its governing document |
Charity has no permanent endowment no power to dissolve and has not applied assets strictly in accordance with requirements of governing document |
| Remove subject to check confirming that registration is actually voluntary on the date of the review (see OG 17 A3) |
Remove even if charity had permanent endowment (see section 3.2 of OG 202 B2) |
Charity cannot be dissolved and consequently removed until land is disposed of either in accordance with section 36 of the 1993 Act or as directed by governing document (see section 1.4 of OG 202 B1) |
Charity cannot be removed. Consider whether section 74 or 75 action (see OG 201) or a Scheme (see OG 1) might be appropriate |
Remove if properly completed CSD 1344B declaration form has been received or other evidence such as copies of minutes or resolutions indicate that the requirements of the governing document have been met (see section 3 of OG 202 B2) |
Remove if properly completed CSD 1344B declaration form has been received or other evidence of the application of all the assets, such as final accounts (see section 3 of OG 202 B2) |
Remove if satisfied that the application is as similar in character to the objects of the charity as is practical in the circumstances (see section 3 of OG 202 B2) |
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Index to further related information