In its submission to the Hodgson review of the Charities Act 2006, the regulator says this sanction could be linked to suspension from its register
Suspension from the register of charities and loss of Gift Aid are the sanctions preferred by the Charity Commission against charities that fail to file their accounts and annual reports on time.
In its response to the review of the Charities Act 2006, being conducted by the Conservative peer Lord Hodgson, the regulator says about possible sanctions that "we favour most strongly the withdrawal of Gift Aid, possibly in conjunction with suspension from the register".
It says it would "welcome an opportunity" to develop the withdrawal of Gift Aid as a sanction.
Other points in the regulator’s submission say:
- Charities should not be charged for registration and regulatory services
- The public charitable collections regime in the Charities Act 2006, which would include licensing of street and door-to-door fundraising, would cost the commission millions to implement
- A code of practice for fundraising collections outside supermarkets should be developed, because the regulator receives "frequent" complaints
- More should be done to encourage membership of the Fundraising Standards Board
- The jurisdiction of the charity tribunal should not be widened to cover any of the commission’s regulatory decisions.
In response to a question from Hodgson about what sanctions should there be for charities that fail to submit accounts on time, the regulator says the existing sanction, prosecution of charity trustees, was generally considered disproportionate.
"From the public policy perspective, there is an expectation that charities are accountable," it says. "Where they are not – because, for example, they fail to offer a timely account of their activities in furtherance of their purposes – the taxpayer may consider that there should be at least some reduction in the available tax reliefs."
It says that "further consideration should be given to creating a legal power to suspend defaulting charities from the register, although it would be necessary to explore further the complex legal issues that this might give rise to". The regulator stresses that the sanctions are "possible options".
In his call for evidence, Hodgson also asked whether the commission should charge for its registration and regulatory services to charities in the same way as most other regulators do. The commission is strongly against this idea, saying that the possible options, including a levy on all registered charities or taking a small percentage of Gift Aid or other tax reliefs, are unsuitable.
It says this is because the sector is not commercial and contributions cannot be deducted from profits, while a charging policy would be seen as "a tax on charities" and would "risk being a disincentive to community charitable activity".
The commission says that fundraising is extremely important for the reputation of the sector, but it has "no firm view on how public charitable collections might best be regulated".
The Charities Act 2006 sets out proposals for the commission to regulate public charitable collections. However, this section has never come into effect, and the regulator says that the cost of implementation would run into millions.
"We estimated the costs would be around £4m in set-up costs spread over the first two years, with annual running costs of around £1.5m after that," the submission says.