Commentary on Provisions Charity accounts Section 12 – Removal of non-responsive charities for failure to submit accounts
70.Under section 44(1)(d) of the 2005 Act, all charities on the Register are under an obligation to provide a statement of account to OSCR each year. This must first be independently examined or audited. A deadline for submission of charity accounts has been imposed by the 2006 Regulations and, other than in the case of charities that are removed from the Register, is set at 9 months after the end of the charity’s financial year end.
71.Where a charity fails to provide accounts as required, there is a power under section 45 of the 2005 Act for OSCR to appoint a suitably qualified person to prepare the accounts on the charity’s behalf. However, the appointed person would need access to the charity’s records to be able to prepare meaningful accounts, and therefore this power cannot be used where OSCR is unable to make contact with the charity.
72.This section of the Act therefore introduces a new power for OSCR. It applies where a charity has not submitted its accounts, the deadline for submission has passed, the charity has not responded to communications from OSCR in respect of the failure, and accounts have not been prepared (and are not in the process of being prepared) by a suitably qualified person under section 45. In such a case, OSCR can decide that the charity should be removed from the Register. If OSCR concludes that this is appropriate, OSCR must give the charity notice of this intention to remove it.
73.Once a charity is given notice of OSCR’s intended removal, the charity is given 3 months to act. If it makes contact with OSCR in that period, no further action can proceed under this section. There is no stipulation as to the form that the contact must take or what it must include. As such, a phone call would serve to prevent further proceedings just as much as a letter or email would.
74.Where no contact from the charity is forthcoming, OSCR may decide to proceed with removal of the charity from the Register. This is a power rather than something that will happen automatically though: as such, if the charity fails to get in touch but OSCR receives information from a third party which prompts it to reconsider the appropriateness of proceeding, the process can be halted.
75.Under section 71 of the 2005 Act, any decision to proceed with the removal of a charity is one against which there will be review and appeal rights in line with the normal process of the 2005 Act. Further, under section 73(2) of the 2005 Act, the effect of the decision to remove the charity will be automatically suspended until the notice has been served and either the period within which OSCR can be required to carry out a review (i.e. within 21 days of the notice being given) has expired without a review being requested or, if a review is requested, the appeal process has been exhausted.
76.This section of the Act also makes provision for a number of points of detail about how information regarding potential removals is communicated—
	Firstly, any notice of intention to remove a charity must set out certain things: specifically, that the criteria in subsection (1) of this section have been met and that the charity risks being removed from the Register unless it makes contact with OSCR within the specified 3 month period.
	Secondly, OSCR is required to publish on its website a list of charities which are subject to the risk of removal following the issuing of a notice of intended removal. If, for example, it was determined on appeal that it would be inappropriate to proceed with the removal, that notice would no longer remain in effect and the charity would cease to appear on that list.
	Finally, OSCR is also empowered to take any further steps it considers appropriate to draw the notice to the attention of those likely to be affected by it.
77.For most charities, removal from the Register means that the body ceases to be a charity, but it does not cease to exist as an organisation (for example, as a company, a trust or an unincorporated association). The assets that it held as a charity would continue to be protected under section 19 of the 2005 Act, but the organisation itself could otherwise operate as a non-charity. However, in the case of a charity which takes the legal form of a SCIO, section 55(7) of the 2005 Act provides that upon ceasing to be a charity, it ceases to be a SCIO. As such, it cannot simply be struck off the Register without its assets first being dealt with appropriately. Accordingly, in the application of this section of the Act to SCIOs, the power to remove is, instead, a power to take steps to first secure the SCIO’s dissolution and only once that has occurred is there a power to remove it from the Register.