SMALL CHARITIES: DISSOLUTIONS AND REMOVAL FROM THE REGISTER OG202 B1

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OPERATIONAL GUIDANCE

SMALL CHARITIES: DISSOLUTIONS AND REMOVALS FROM THE REGISTER

IDENTIFYING AND ADVISING SMALL CHARITIES

OG 202 B1 - 5 July 2006

Purpose

This OG defines what a small charity is for the purpose of this series of OGs and indicates the advice that should be given to small charities that enquire about dissolution.

Functional responsibility

For action

Charity Services

For information

Legal Division

Contents

1. What is a small charity?
2. Advice to charities
Glossary of Terms used in this Guidance

Index to further related information


The Law	Refer to a lawyer	Refer to an accountant

1. What is a small charity?
	1.1 General definition 1.2 Exceptions for the purposes of this OG series 1.3 How to assess whether the income is within the small charities threshold 1.4 Charities than hold land

	1.1 General definition
	Subject to the exceptions below, for the purposes of this series of OGs, a "small charity" is an unincorporated charity that has a gross annual income of less than £20,000.

	1.2 Exceptions for the purposes of this OG series
	For the specific purposes of considering dissolution and removal cases involving small charities, we exclude:
	charities with permanent endowment worth more than the de minimis threshold for assets; or
	charities which own an interest in land. Further information on this subject is contained in section 1.4.

	1.3 How to assess whether the income is within the small charities threshold
	Recent information about a charity’s income should be provided to us on a regular basis by the Annual Information Return, which all charities are asked to complete. Provided that the latest information on CDB indicates that the income was under £20,000 this is sufficient evidence that the charity meets the small charities income requirement.

	1.4 Charities that own land
	In cases where a charity owns land (or an interest in land such as a lease), it cannot be removed from the Register until it has disposed of that land. It is also only when that has occurred that we can judge whether we can apply the fast track approach in that particular case. The small charities income limit of not more than £20,000 applies in all cases, but an asset limit of £200,000 also applies in different ways depending on the circumstances. If the charity:
	has owned land and disposed of it on the open market we should ensure that the requirements of section 36 of the 1993 Act have been met and for the value of the proceeds of sale to be included in the evidence we consider (if the value of the charity’s assets including the proceeds of sale is over £200,000 the fast track approach should not be used).
	owned land and has transferred it to another charity on dissolution as directed by its governing document, we do not need to know its value although the fast track approach should not be used if there is evidence that other assets are valued at more than £200,000.
	Both the above situations are covered if a charity chooses to notify us of its dissolution by means of a declaration using form CSD 1344B.
	If the charity does not notify us of its dissolution by means of a CSD 1344B declaration we will still need evidence that the charity has disposed of the land. This will apply where the sale has taken place since the start of the charity’s current accounting period.

2. Advice to charities
	Enquiries from small charities about the procedures involved in dissolution or winding up should be answered following the advice contained in Small Charities: Guidance: Winding up (CSD 1344A) (see OG 202 C1).
	If the charity’s governing document includes directions for dissolution the trustees should be advised to follow those directions. If the governing document does not include such directions and the charity does not have permanent endowment the trustees should be advised to apply the remaining assets for the purposes of the charity. Section 3 of OG 202 B2 indicates applications we will accept if a small charity advises us that the action has already been taken.
	In all cases the charity should be referred to the availability of the CSD 1344A guidance on the Commission website. This guidance can also be sent to the charity in hard copy. In all cases charities should be advised that following the correct procedures will minimise the risk of our making enquiries after the charity has dissolved.
	Check if a charity has received and not used grants or donations. If grants or donations have been received the trustees should be advised to check if the terms by which they were given require them to be returned to the grantors or donors. This should be done prior to distributing the assets before dissolution.

Glossary of Terms used in this Guidance
	1993 Act
	CDB
	de minimis
	governing document
	gross income
	permanent endowment
	trustees

Index to further related information