Key issues for charity trustees from recent Charity Commission inquiries: tax risks with non-charitable expenditure and failure to wind-up dormant charity

Recent inquiries by the Charity Commission have highlighted two key issues for charity trustees: ensuring charitable funds are only spent in furtherance of your charity's purposes and trustees' ongoing responsibilities where a charity is inactive or dormant. 

The Charity Commission inquiry into Rhema Church London found that the trustees' failure to have sufficient oversight of the charity's funds (there being misuse of charitable funds by a staff member and the subsequent mis-categorisation of this spending in the charity's accounts) ultimately resulted in a significant tax liability being incurred by the charity.  For further detail, see our full article on the Rhema Church London inquiry here.

A separate Commission inquiry into the Macbeth Memorial Trust concerned the role that trustees have when their charity is no longer active. In this case, the Commission found that the trustees had not taken steps to close the charity, despite consulting the Commission on how to do so and receiving multiple deadlines to file overdue accounts. The Commission eventually issued the charity with an Official Warning, and following further inaction from the trustees the Commission launched an inquiry in 2022.  The issues identified in the report include non-compliance with the charity's governing document, failure to comply with the requirements of the Official Warning and accompanying advice from the Commission (including failure to file the required financial information with the Commission).  The charity was removed from the register in March.