20 September 2013
The Charity Commission (CC) claims it has implemented many of the Public Accounts Committee’s (PAC) recommendations regarding its lax approach to adequately regulating charities.
In particular, the PAC criticised the CC’s handling of the Cup Trust case, an investigation that began in March 2010, looking into the charity’s governance and fundraising.
Responding to the Committee’s criticisms, the CC has accepted all of the PAC's recommendations while challenging some of the conclusions on which the recommendations are founded.
In particular, it confirms that it is working increasingly closely with HMRC, including by developing a joint portal allowing charities to apply simultaneously for registration as a charity with the CC and for recognition as a ‘charity for tax purposes’ with HMRC. The proposed system will maintain independent decision making by the two authorities, but will allow them to work more closely together.
The CC has also confirmed that it has tightened up its registration process since the Cup Trust was registered in 2009, saying it has implemented a new risk framework and assessment processes which identify complex structures, including links to other companies, as high risk, allowing the regulator to ask probing questions where it has concerns.
Looking into the CC’s investigation of the Cup Trust as well as its procedures for regulating charities in general in June 2013, the PAC found that, despite its charitable aims, the Cup Trust had been set up as a tax avoidance scheme.
Margaret Hodge, Chair of PAC, commented in June that the CC’s ‘approach to regulation and enforcement lacks rigour. It has carried out few enforcement visits, rarely mounts prosecutions and removes very few trustees.
‘Over the past 25 years, the Committee and NAO have repeatedly found severe shortcomings in the Commission’s performance. We were shocked to hear the Chair and Chief Executive admit that they had not bothered to read the NAO’s reports, and were unaware of the Committee’s recommendations. It appears that the Commission has simply failed to seriously consider and implement our previous recommendations. We will now undertake yet another thorough investigation of the Charity Commission and whether it is fit for purpose.’