The Charity Commission should focus more on its core function of regulation and develop a system for charging charities that file their accounts late, says the government in its response to reports from the Public Administration Select Committee and Lord Hodgson.
The government today published its response to Lord Hodgson’s statutory review of the Charities Act 2006, Trusted and Independent: Giving Charity Back to Charities, and the PASC report The Role of the Charity Commission and "Public Benefit": Post-legislative Scrutiny of the Charities Act 2006.
The response says that the Cabinet Office will work with the commission to "identify statutory functions that add little value to the regulation of the charity sector but are resource-intensive for the commission, and investigate the options for removing or reducing them".
The response follows a recommendation by the PASC that the Cabinet Office should prioritise what it wants from the commission and allow the regulator to focus on its core task of regulation. Lord Hodgson made a similar recommendation in his report.
The government response says it is working with the commission to consider options for strengthening its "proactive monitoring and risk-assessment functions and practices".
It continues: "We will also consider whether any changes are needed to the commission’s compliance powers to improve the efficiency or effectiveness of its compliance and enforcement work."
The report says that legislative change would not be required to support the refocusing of the commission’s objectives "and would be a distraction from the commission’s focus on its priorities".
In reference to the Cup Trust tax-avoidance scandal, the response says the government is working with the commission to consider whether any changes need to be made to its compliance powers to help it to identify and tackle abuse more effectively.
But it says the government cannot comment directly on the Cup Trust case because Mountstar PTC, the corporate trustee of the charity, is awaiting a hearing before the charity tribunal about the commission’s decision to open a statutory inquiry and appoint an interim manager to run the charity.
The government’s response says it welcomes the recommendation made by Hodgson, supported by the committee, to develop a system for fining charities that file their accounts late. But it does not support Hodgson’s recommendation for the commission to charge the charities it regulates.
"The government will explore with the commission the scope for such a system of late-filing fines, giving due consideration to the practical difficulties of such a system both for the commission and charities concerned," the response says. However, the change will require legislation, it adds.
The government has previously said it would consider the proposal for a late-filing fee, but did not accept the idea outright.
Hodgson also recommended that sanctions for late returns should include the withdrawal of Gift Aid. But the government’s response says it would be impractical and costly for HMRC to withhold Gift Aid on a regular basis.
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