The charity tribunal has found in favour of the Charity Commission in a case which could make it easier for the commission to remove charities from the charities register where there is no evidence of charitable activity.
In a ruling published this week, the tribunal upheld the commission’s decision to remove the 1Click Charitable Trust from the register of charities in February on the grounds that it was not operating in pursuit of its charitable aims, although the trustees argued that it was. The charity was also found to have had no sustainable plan for raising funds.
The trustees appealed the decision, also in February, arguing that 1Click did operate as a charity.
A commission spokesman said the case set a legal precedent for the commission, which would allow it to more easily remove charities where there was no evidence of charitable activity.
The trust was registered in 2010 with the aim of developing a simple home computer system for the elderly and at the time said it expected to have an annual income of £600,000 from EU grants.
But until December 2015, when the commission wrote to the charity saying it planned to deregister it, its highest annual declared income was £3,751 and for three years its annual income was less than £5, according to tribunal papers.
The charity told the tribunal that it had been unsuccessful in seeking grants, and had established a trading subsidiary to run a pub to generate income but had struggled to do so, although trustees said they expected it to generate £50,000 for the charity by the end of the financial year.
But the commission said the subsidiary’s accounts suggested the pub would only be able to transfer £2,000 to the charity at the end of the current financial year.
Two trustees were also living in the pub rent-free, the ruling said.
As a result of being unable to generate funds, the charity had not made any progress on its charitable aims, although trustees told the tribunal they had a friend in Malaysia who had offered to develop the software for them if they could raise £100,000.
In its ruling, the tribunal said that the charity "does not operate".
"This is because it has undertaken negligible charitable activity since its inception and further that it has submitted no evidence of having adopted a structured approach to generating funds in order to operate in the future," the ruling said.
It also acknowledged the charity did not meet the minimum income threshold of £5,000 for a charity to be included on the register but said this was not why the charity was removed.
Stephen Flanagan, the chair of trustees at 1Click, told Third Sector trustees planned to wind up the organisation, rather than continue to operate as an unregistered charity.
He said this was because the charity currently banks with the Charities Aid Foundation, which usually only offers its services to registered charities and it would be too inconvenient to change bank accounts.
He said: "It’s the feeling of the trustees that we don’t want to go on any more if the Charity Commission can be so picky – why pick on us?"
He said the charity had been proactively seeking funds and that the tribunal and commission decisions were unfair.
Kenneth Dibble, the commission’s legal director, said in a statement: "We will adopt a robust approach in removing these charities where they have minimal assets and are making no significant attempts to further charitable purposes."