Legalize / United Kingdom / Public General Act

Charities Act 2011

Type Public General Act

Publication 2011-12-14

Last updated 2025-11-27

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

the charity trustees must apply to the registrar for the removal of the entry.

(4) On receiving any application duly made under subsection (3) the registrar must remove the entry.

(5) Where—

(a) any registered land is held by or in trust for an exempt charity and the charity ceases to be an exempt charity, or

(b) any registered land becomes, as a result of a declaration of trust by the registered proprietor, land held in trust for a charity (other than an exempt charity),

the charity trustees must apply to the registrar for such a restriction as is mentioned in subsection (2) to be entered in the register in respect of the land.

(6) On receiving any application duly made under subsection (5) the registrar must enter such a restriction in the register in respect of the land.

Restrictions on mortgages of land in England and Wales

Restrictions on mortgages

124

(1) Subject to subsection (2), no mortgage of land held by or in trust for a charity is to be granted without an order of—

(a) the court, or

(b) the Commission.

(2) Subsection (1) does not apply to a mortgage of any such land if the charity trustees have, before executing the mortgage, obtained and considered proper advice, given to them in writing, on the relevant matters or matter mentioned in subsection (3) or (4) (as the case may be).

(3) In the case of a mortgage to secure the repayment of a proposed loan or grant, the relevant matters are—

(a) whether the loan or grant is necessary in order for the charity trustees to be able to pursue the particular course of action in connection with which they are seeking the loan or grant,

(b) whether the terms of the loan or grant are reasonable having regard to the status of the charity as the prospective recipient of the loan or grant, and

(4) In the case of a mortgage to secure the discharge of any other proposed obligation, the relevant matter is whether it is reasonable for the charity trustees to undertake to discharge the obligation, having regard to the charity's purposes.

(5) Subsection (3) or (as the case may be) subsection (4) applies in relation to such a mortgage as is mentioned in that subsection whether the mortgage—

(a) would only have effect to secure the repayment of the proposed loan or grant or the discharge of the proposed obligation, or

(b) would also have effect to secure the repayment of sums paid by way of loan or grant, or the discharge of other obligations undertaken, after the date of its execution.

(6) Subsection (7) applies where—

(a) the charity trustees of a charity have executed a mortgage of land held by or in trust for a charity in accordance with subsection (2), and

(b) the mortgage has effect to secure the repayment of sums paid by way of loan or grant, or the discharge of other obligations undertaken, after the date of its execution.

(7) In such a case, the charity trustees must not after that date enter into any transaction involving—

(a) the payment of any such sums, or

(b) the undertaking of any such obligations,

unless they have, before entering into the transaction, obtained and considered proper advice, given to them in writing, on the matters or matter mentioned in subsection (3)(a) to (c) or (4) (as the case may be).

(8) For the purposes of this section proper advice is the advice of a person—

(a) who is reasonably believed by the charity trustees to be qualified by ability in and practical experience of financial matters, and

(b) who has no financial interest in relation to the loan, grant or other transaction in connection with which the advice is given.

...

(9) This section applies regardless of anything in the trusts of a charity; but nothing in this section applies to any mortgage—

(a) for which general or special authority is given as mentioned in section 117(3)(a), or

(aa) granted by a liquidator, provisional liquidator, receiver, mortgagee or an administrator.

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(10) Nothing in this section applies to an exempt charity.

Mortgages: required statements, etc.

125

(1) Any mortgage of land held by or in trust for a charity must—

(a) state that the land is held by or in trust for a charity,

(b) state whether the charity is an exempt charity and whether the mortgage is one falling within section 124(9), and

(c) if the charity is not an exempt charity and the mortgage is not one falling within section 124(9), include the statement required by subsection (1A).

(1A) The statement is—

(a) in a case where section 124(1) applies, a statement that the mortgage has been sanctioned by an order of the court or of the Charity Commission, or

(b) in a case where section 124(2) applies, a statement that there is power under the trusts of the charity to grant the mortgage and the requirements of section 124(2) have been complied with.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) Where subsection (1)(c) has been complied with in relation to any mortgage, then in favour of a person who (whether under the mortgage or afterwards) acquires an interest in the land in question for money or money's worth, it is conclusively presumed that the statement is true.

(5) Where subsection (1)(c) applies in relation to a mortgage of land but the statement required by subsection (1A) has not been included in it, then in favour of a person who (whether under the mortgage or afterwards) in good faith acquires an interest in the land for money or money’s worth, the mortgage is valid even if—

(a) the mortgage has not been sanctioned by an order of the court or of the Charity Commission, or

(b) there is no power under the trusts of the charity to grant the mortgage or the requirements of section 124(2) have not been complied with in relation to it (or both).

(6) Where section 124(7) applies to any mortgage of land held by or in trust for a charity, the charity trustees must certify in relation to any transaction falling within section 124(7) that they have obtained and considered such advice as is mentioned in section 124(7).

(7) Where subsection (6) has been complied with in relation to any transaction, then, in favour of a person who (whether under the mortgage or afterwards) has acquired or acquires an interest in the land for money or money's worth, it is conclusively presumed that the facts were as stated in the certificate.

Mortgages of charity land and land registration

126

(1) Where the mortgage referred to in section 125(1) will be a registrable disposition, the statement required by section 125(1) must be in such form as may be prescribed by land registration rules.

(2) Where any such mortgage will be one to which section 4(1)(g) of the Land Registration Act 2002 applies—

(a) the statement required by section 125(1) must be in such form as may be prescribed by land registration rules, and

(b) if the charity is not an exempt charity, the mortgage must also contain a statement, in such form as may be prescribed by land registration rules, that the restrictions on disposition imposed by sections 117 to 121 apply to the land (subject to section 117(3)).

(3) Where—

(a) the registrar approves an application for registration of a person's title to land in connection with such a mortgage as is mentioned in subsection (2),

(b) the mortgage contains statements complying with section 125(1) and subsection (2), and

the registrar must enter in the register a restriction reflecting the limitation under sections 117 to 121 on subsequent disposal.

(4) Subsections (3) and (4) of section 123 (removal of entry) apply in relation to any restriction entered under subsection (3) as they apply in relation to any restriction entered under section 123(2).

Release of charity rentcharges

127

(1) Section 117(1) does not apply to the release by a charity of a rentcharge which it is entitled to receive if the release is given in consideration of the payment of an amount which is not less than 10 times the annual amount of the rentcharge.

(2) Where a charity which is entitled to receive a rentcharge releases it in consideration of the payment of an amount not exceeding £1,000, any costs incurred by the charity in connection with proving its title to the rentcharge are recoverable by the charity from the person or persons in whose favour the rentcharge is being released.

(3) Neither section 117(1) nor subsection (2) of this section applies where a rentcharge which a charity is entitled to receive is redeemed under sections 8 to 10 of the Rentcharges Act 1977.

Power to alter sum specified in s.127(2)

128

The Secretary of State may by order amend section 127(2) by substituting a different sum for the sum for the time being specified there.

Interpretation

129

(1) In sections 117 to 126 “land” means land in England and Wales.

(2) In sections 124 to 126 “mortgage” includes a charge.

(3) Sections 123 and 126 are to be construed as one with the Land Registration Act 2002.

Part 8 — Charity accounts, reports and returns

CHAPTER 1 — Individual accounts

Accounting records

130

(1) The charity trustees of a charity must ensure that accounting records are kept in respect of the charity which are sufficient to show and explain all the charity's transactions, and which are such as to—

(a) disclose at any time, with reasonable accuracy, the financial position of the charity at that time, and

(b) enable the trustees to ensure that, where any statements of accounts are prepared by them under section 132(1), those statements of accounts comply with the requirements of regulations under section 132(1).

(2) The accounting records must in particular contain—

(a) entries showing from day to day all sums of money received and expended by the charity, and the matters in respect of which the receipt and expenditure takes place, and

(b) a record of the assets and liabilities of the charity.

Preservation of accounting records

131

(1) The charity trustees of a charity must preserve any accounting records made for the purposes of section 130 in respect of the charity for at least 6 years from the end of the financial year of the charity in which they are made.

(2) Subsection (3) applies if a charity ceases to exist within the period of 6 years mentioned in subsection (1) as it applies to any accounting records.

(3) The obligation to preserve the accounting records in accordance with subsection (1) must continue to be discharged by the last charity trustees of the charity, unless the Commission consents in writing to the records being destroyed or otherwise disposed of.

Preparation of statement of accounts

132

(1) The charity trustees of a charity must (subject to section 133) prepare in respect of each financial year of the charity a statement of accounts complying with such requirements as to its form and contents as may be prescribed by regulations made by the Secretary of State.

(2) Regulations under subsection (1) may in particular make provision—

(a) for any such statement to be prepared in accordance with such methods and principles as are specified or referred to in the regulations;

(b) as to any information to be provided by way of notes to the accounts.

(3) Regulations under subsection (1) may also make provision for determining the financial years of a charity for the purposes of this Act and any regulations made under it.

(4) But regulations under subsection (1) may not impose on the charity trustees of a charity that is a charitable trust created by any person (“the settlor”) any requirement to disclose, in any statement of accounts prepared by them under subsection (1)—

(a) the identities of recipients of grants made out of the funds of the charity, or

(b) the amounts of any individual grants so made,

if the disclosure would fall to be made at a time when the settlor or any spouse or civil partner of the settlor was still alive.

Account and statement an option for lower-income charities

133

If a charity's gross income in any financial year does not exceed £250,000, the charity trustees may, in respect of that year, elect to prepare—

(a) a receipts and payments account, and

(b) a statement of assets and liabilities,

instead of a statement of accounts under section 132(1).

Preservation of statement of accounts or account and statement

134

(1) The charity trustees of a charity must preserve—

(a) any statement of accounts prepared by them under section 132(1), or

(b) any account and statement prepared by them under section 133,

for at least 6 years from the end of the financial year to which any such statement relates or (as the case may be) to which any such account and statement relate.

(2) Subsection (3) applies if a charity ceases to exist within the period of 6 years mentioned in subsection (1) as it applies to any statement of accounts or account and statement.

(3) The obligation to preserve the statement or account and statement in accordance with subsection (1) must continue to be discharged by the last charity trustees of the charity, unless the Commission consents in writing to the statement or account and statement being destroyed or otherwise disposed of.

Charitable companies

135

Nothing in sections 130 to 134 (preparation and preservation of individual accounts) applies to a charitable company.

Exempt charities

136

(1) Nothing in sections 130 to 134 (preparation and preservation of individual accounts) applies to an exempt charity.

(2) But the charity trustees of an exempt charity—

(a) must keep proper books of account with respect to the affairs of the charity, and

(b) if not required by or under the authority of any other Act to prepare periodical statements of account must prepare consecutive statements of account consisting on each occasion of—

(i) an income and expenditure account relating to a period of not more than 15 months, and

(ii) a balance sheet relating to the end of that period.

(3) The books of accounts and statements of account relating to an exempt charity must be preserved for a period of at least 6 years unless—

(a) the charity ceases to exist, and

(b) the Commission consents in writing to their being destroyed or otherwise disposed of.

CHAPTER 2 — Group accounts

Accounting records

137

(1) The charity trustees of a parent charity or of any charity which is a subsidiary undertaking must ensure that the accounting records kept in respect of the charity under—

(a) section 130(1) (individual accounts: accounting records), or

(b) (as the case may be) section 386 of the Companies Act 2006 (duty to keep accounting records),

are such as to enable the charity trustees of the parent charity to ensure that, where any group accounts are prepared by them under section 138(2), those accounts comply with the requirements of regulations under section 142.

(2) The duty in subsection (1) is in addition to the duty to ensure that the accounting records comply with the requirements of—

(a) section 130(1), or

(b) section 386 of the Companies Act 2006.

(3) Subsection (4) applies if a parent charity has a subsidiary undertaking in relation to which the requirements of—

(a) section 130(1), or

(b) section 386 of the Companies Act 2006,

do not apply.

(4) The charity trustees of the parent charity must take reasonable steps to secure that the undertaking keeps such accounting records as to enable the trustees to ensure that, where any group accounts are prepared by them under section 138(2), those accounts comply with the requirements of regulations under section 142.

Preparation of group accounts

138

(1) This section applies in relation to a financial year of a charity if—

(a) the charity is a parent charity at the end of that year, and

(b) (where it is a company) it is not required to prepare consolidated accounts for that year under section 399 of the Companies Act 2006 (duty to prepare group accounts), whether or not such accounts are in fact prepared.

(2) The charity trustees of the parent charity must prepare group accounts in respect of that year.

(3) If the requirement in subsection (2) applies to the charity trustees of a parent charity (other than a parent charity which is a company) in relation to a financial year—

(a) that requirement so applies in addition to the requirement in section 132(1) (statement of accounts), and

(b) the option of preparing the documents mentioned in section 133 (account and statement) is not available in relation to that year (whatever the amount of the charity's gross income for that year).

(4) If—

(a) the requirement in subsection (2) applies to the charity trustees of a parent charity in relation to a financial year, and

(b) the charity is a company,

that requirement so applies in addition to the requirement in section 394 of the Companies Act 2006 (duty to prepare individual accounts).

(5) Subsection (2) is subject to section 139.

Exceptions to requirement to prepare group accounts

139

(1) The requirement in section 138(2) does not apply to the charity trustees of a parent charity in relation to a financial year if at the end of that year it is itself a subsidiary undertaking in relation to another charity.

(2) The requirement in section 138(2) does not apply to the charity trustees of a parent charity in relation to a financial year if the aggregate gross income of the group for that year does not exceed such sum as is specified in regulations made by the Secretary of State.

(3) Regulations made by the Secretary of State may prescribe circumstances in which a subsidiary undertaking may or (as the case may be) must be excluded from group accounts required to be prepared under section 138(2) for a financial year.

(4) Where, by virtue of such regulations, each of the subsidiary undertakings which are members of a group is—

(a) permitted to be excluded from any such group accounts for a financial year, or

(b) required to be so excluded,

the requirement in section 138(2) does not apply to the charity trustees of the parent charity in relation to that year.

Preservation of group accounts

140

(1) The charity trustees of a charity must preserve any group accounts prepared by them under section 138(2) for at least 6 years from the end of the financial year to which the accounts relate.

(2) Subsection (3) applies if a charity ceases to exist within the period of 6 years mentioned in subsection (1) as it applies to any group accounts.

(3) The obligation to preserve the accounts in accordance with subsection (1) must continue to be discharged by the last charity trustees of the charity, unless the Commission consents in writing to the accounts being destroyed or otherwise disposed of.

“Parent charity”, “subsidiary undertaking” and “group”

141

(1) This section applies for the purposes of this Part.

(2) A charity is a parent charity if it is (or is to be treated as) a parent undertaking in relation to one or more other undertakings in accordance with the provisions of section 1162 of, and Schedule 7 to, the Companies Act 2006.

(3) Each undertaking in relation to which a parent charity is (or is to be treated as) a parent undertaking in accordance with those provisions is a subsidiary undertaking in relation to the parent charity.

(4) But subsection (3) does not have the result that any of the following is a subsidiary undertaking—

(a) any special trusts of a charity,

(b) any institution which, by virtue of a direction under section 12(1), is to be treated as forming part of a charity for the purposes of this Part, or

(5) “The group”, in relation to a parent charity, means that charity and its subsidiary undertaking or undertakings, and any reference to the members of the group is to be read accordingly.

(6) For the purposes of this section and the operation for those purposes of section 1162 of, and Schedule 7 to, the Companies Act 2006 “undertaking” means—

(a) an undertaking as defined by section 1161(1) of the 2006 Act, or

(b) a charity which is not an undertaking as so defined.

“Group accounts”

142

(1) For the purposes of this Part, “group accounts” means consolidated accounts—

(a) relating to the group, and

(b) complying with such requirements as to their form and contents as may be prescribed by regulations made by the Secretary of State.

(2) Regulations under subsection (1) may in particular make provision—

(a) for any such accounts to be prepared in accordance with such methods and principles as are specified or referred to in the regulations;

(b) for dealing with cases where the financial years of the members of the group do not all coincide;

(3) Regulations under subsection (1) may also make provision—

(a) for determining the financial years of subsidiary undertakings for the purposes of this Part;

(b) for imposing on the charity trustees of a parent charity requirements with respect to securing that such financial years coincide with that of the charity.

Exempt charities

143

Nothing in sections 137 to 142 (preparation and preservation of group accounts) applies to an exempt charity.

CHAPTER 3 — Audit or examination of accounts

Audit or examination of individual accounts

Audit of accounts of larger charities

144

(1) Subsection (2) applies to a financial year of a charity if—

(a) the charity's gross income in that year exceeds £1 million, or

(b) the charity's gross income in that year exceeds the accounts threshold and at the end of the year the aggregate value of its assets (before deduction of liabilities) exceeds £3.26 million.

“The accounts threshold” means the sum for the time being specified in section 133 (account and statement an option for lower-income charities).

(2) If this subsection applies to a financial year of a charity, the accounts of the charity for that year must be audited by a person who—

(a) is eligible for appointment as a statutory auditor under Part 42 of the Companies Act 2006, or

(b) is a member of a body for the time being specified in regulations under section 154 and is under the rules of that body eligible for appointment as auditor of the charity.

Examination of accounts an option for lower-income charities

145

(1) If section 144(2) does not apply to a financial year of a charity but its gross income in that year exceeds £25,000, the accounts of the charity for that year must, at the election of the charity trustees, be—

(a) examined by an independent examiner, that is, an independent person who is reasonably believed by the trustees to have the requisite ability and practical experience to carry out a competent examination of the accounts, or

(b) audited by a person within section 144(2)(a) or (b).

(2) Subsection (1) is subject to—

(a) subsection (3), and

(b) any order under section 146(1).

(3) If subsection (1) applies to the accounts of a charity for a year and the charity's gross income in that year exceeds £250,000, a person qualifies as an independent examiner for the purposes of subsection (1)(a) if (and only if) the person is independent and—

(a) a member of one of the bodies listed in subsection (4), or

(b) a Fellow of the Association of Charity Independent Examiners.

(4) The bodies referred to in subsection (3)(a) are—

(a) the Institute of Chartered Accountants in England and Wales;

(b) the Institute of Chartered Accountants of Scotland;

(d) the Association of Chartered Certified Accountants;

(e) the Association of Authorised Public Accountants;

(f) the Association of Accounting Technicians;

(g) the Association of International Accountants;

(h) the Chartered Institute of Management Accountants;

(i) the Institute of Chartered Secretaries and Administrators;

(j) the Chartered Institute of Public Finance and Accountancy.

(k) the Institute of Financial Accountants;

(l) the Certified Public Accountants Association.

(5) The Commission may—

(a) give guidance to charity trustees in connection with the selection of a person for appointment as an independent examiner;

(b) give such directions as it thinks appropriate with respect to the carrying out of an examination in pursuance of subsection (1)(a);

and any such guidance or directions may either be of general application or apply to a particular charity only.

(6) The Secretary of State may by order—

(a) amend subsection (3) by adding or removing a description of person to or from the list in that subsection or by varying any entry for the time being included in that list;

(b) amend subsection (4) by adding or removing a body to or from the list in that subsection or by varying any entry for the time being included in that list.

Commission’s powers to order audit

146

(1) The Commission may by order require the accounts of a charity for a financial year to be audited by a person within section 144(2)(a) or (b) if it appears to the Commission that—

(a) section 144(2), or (as the case may be) section 145(1), has not been complied with in relation to that year within 10 months from the end of that year, or

(b) although section 144(2) does not apply to that year, it would nevertheless be desirable for the accounts of the charity for that year to be audited by a person within section 144(2)(a) or (b).

(2) If the Commission makes an order under subsection (1) with respect to a charity, the auditor must be a person appointed by the Commission unless—

(a) the order is made by virtue of subsection (1)(b), and

(b) the charity trustees themselves appoint an auditor in accordance with the order.

(3) The expenses of any audit carried out by an auditor appointed by the Commission under subsection (2), including the auditor's remuneration, are recoverable by the Commission—

(a) from the charity trustees of the charity concerned, who are personally liable, jointly and severally, for those expenses, or

(b) to the extent that it appears to the Commission not to be practical to seek recovery of those expenses in accordance with paragraph (a), from the funds of the charity.

Accounts required to be audited under Companies Act

147

(1) Nothing in sections 144 to 146 applies in relation to the accounts of a charitable company for a financial year if those accounts are required to be audited in accordance with Part 16 of the Companies Act 2006 (“Part 16 accounts”).

(2) In the case of a charitable company, the Commission may by order require that the condition and Part 16 accounts of the company for such period as the Commission thinks fit are to be investigated and audited by an auditor who—

(a) is eligible for appointment as a statutory auditor under Part 42 of the Companies Act 2006, and

(b) is appointed by the Commission.

(3) An auditor acting under subsection (2)—

(a) has a right of access to all books, accounts and documents relating to the company which are in the possession or control of the charity trustees or to which the charity trustees have access;

(b) is entitled to require from any charity trustee, past or present, and from any past or present officer or employee of the company such information and explanation as the auditor thinks necessary for the performance of the auditor's duties;

(c) must at the conclusion or during the progress of the audit make such reports to the Commission about the audit or about the accounts or affairs of the company as the auditor thinks the case requires, and must send a copy of any such report to the charity trustees.

(4) The expenses of any audit under subsection (2) including the remuneration of the auditor, are to be paid by the Commission.

(5) If any person fails to afford an auditor any facility to which the auditor is entitled under subsection (3), the Commission may by order give to that person or to the charity trustees for the time being such directions as the Commission thinks appropriate for securing that the default is made good.

NHS charities: general

148

Nothing in sections 144 to 146 applies in relation to a financial year of a charity where, at any time in the year, it is—

(a) an English NHS charity (as defined in section 149), or

(b) a Welsh NHS charity (as defined in section 150).

Audit or examination of English NHS charity accounts

149

(1) This section applies in relation to a financial year of a charity where, at any time in the year, it is an English NHS charity.

(2) If section 144(1)(a) or (b) is satisfied in relation to that financial year of the charity, the accounts of the charity for that year must be audited by a person who—

(a) is eligible for appointment as a statutory auditor under Part 42 of the Companies Act 2006,

(b) is eligible for appointment as a local auditor (see Part 4 of the Local Audit and Accountability Act 2014), or

(c) is a member of a body for the time being specified in regulations under section 154 and is under the rules of that body eligible for appointment as auditor of the charity.

(3) In any other case, the accounts of the charity for that financial year must, at the election of the charity trustees, be—

(a) audited by a person who is within subsection (2)(a), (b) or (c), or

(b) examined by a person who is qualified to be an independent examiner.

(3A) For the purposes of subsection (3)(b), a person is qualified to be an independent examiner if (and only if)—

(a) the person is independent,

(b) the charity trustees reasonably believe that the person has the requisite ability and practical experience to carry out a competent examination of the accounts, and

(i) falls within a description of person for the time being included in the list in section 145(3), or

(ii) is eligible for appointment as a local auditor (see Part 4 of the Local Audit and Accountability Act 2014).

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) The Commission may—

(a) give guidance to charity trustees of an English NHS charity in connection with the selection of a person for appointment as an independent examiner;

(b) give such directions as it thinks appropriate with respect to the carrying out of an examination in pursuance of subsection (3)(b);

and any such guidance or directions may either be of general application or apply to a particular charity only.

(6) The Comptroller and Auditor General may at any time examine and inspect—

(a) the accounts of the charity for the financial year,

(b) any records relating to those accounts, and

(7) In this section, “English NHS charity” means a charitable trust, the trustees of which are—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(ba) NHS England,

(bb) an integrated care board,

(bc) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(bd) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c) a National Health Service trust all or most of whose hospitals, establishments and facilities are situated in England,

(d) trustees appointed in pursuance of paragraph 10 of Schedule 4 to the National Health Service Act 2006 for a National Health Service trust falling within paragraph (c),

(e) special trustees appointed in pursuance of section 29(1) of the National Health Service Reorganisation Act 1973, section 95(1) of the National Health Service Act 1977 and section 212(1) of the National Health Service Act 2006 for such a National Health Service trust, or

(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Audit or examination of Welsh NHS charity accounts

150

(1) This section applies in relation to a financial year of a charity where, at any time in the year, it is a Welsh NHS charity.

(2) If section 144(1)(a) or (b) is satisfied in relation to that financial year of the charity, the accounts of the charity for that year must be audited by the Auditor General for Wales.

(3) In any other case, the accounts of the charity for that financial year must, at the election of the Auditor General for Wales, be audited or examined by the Auditor General for Wales.

(4) In this section “Welsh NHS charity” means a charitable trust, the trustees of which are—

(a) a Local Health Board,

(b) a National Health Service trust all or most of whose hospitals, establishments and facilities are situated in Wales,

(c) trustees appointed in pursuance of paragraph 10 of Schedule 3 to the National Health Service (Wales) Act 2006 for a National Health Service trust falling within paragraph (b), or

(d) special trustees appointed in pursuance of section 29(1) of the National Health Service Reorganisation Act 1973, section 95(1) of the National Health Service Act 1977 and section 160(1) of the National Health Service (Wales) Act 2006 for such a National Health Service trust.

(5) References in this Act to an auditor or an examiner have effect in relation to this section as references to the Auditor General for Wales acting under this section as an auditor or examiner.

Audit or examination of group accounts

Audit of accounts of larger groups

151

(1) This section applies where group accounts are prepared for a financial year of a parent charity under section 138(2) and—

(a) the aggregate gross income of the group in that year exceeds the relevant income threshold (see section 176(1)), or

(b) the aggregate gross income of the group in that year exceeds the relevant income threshold and at the end of the year the aggregate value of the assets of the group (before deduction of liabilities) exceeds the relevant assets threshold (see section 176(2)).

(2) This section also applies where—

(a) group accounts are prepared for a financial year of a parent charity under section 138(2), and

(b) the appropriate audit provision applies in relation to the parent charity's own accounts for that year.

(3) In this section “the appropriate audit provision”, in relation to a financial year of a parent charity, means—

(a) (subject to paragraph (b), (c) or (d)) section 144(2) (audit of accounts of larger charities);

(b) if section 149 (audit or examination of English NHS charity accounts) applies in relation to that year, section 149(2);

(c) if section 150 (audit or examination of Welsh NHS charity accounts) applies in relation to that year, section 150(2);

(d) if the parent charity is a company—

(i) section 144(2), or

(ii) (as the case may be) Part 16 of the Companies Act 2006.

(4) If this section applies in relation to a financial year of a parent charity by virtue of subsection (1) or (2), the group accounts for that year must be audited—

(a) (subject to paragraph (b) or (c)) by a person within section 144(2)(a) or (b);

(b) if section 149 applies in relation to that year, by a person, appointed by the charity trustees of the parent charity, who is within section 149(2)(a), (b) or (c) ;

(5) If this section applies in relation to a financial year of a parent charity by virtue of subsection (1)—

(a) (subject to paragraph (b)) the appropriate audit provision applies in relation to the parent charity's own accounts for that year (whether or not it would otherwise so apply);

(b) if the parent charity is a company and its own accounts for that year are not required to be audited in accordance with Part 16 of the Companies Act 2006, section 144(2) applies in relation to those accounts (whether or not it would otherwise so apply).

(6) Section 149(6) applies in relation to any appointment under subsection (4)(b) as it applies in relation to an appointment under section 149(2).

(7) References in this Act to an auditor have effect in relation to subsection (4)(c) as references to the Auditor General for Wales acting under subsection (4)(c) as an auditor.

Examination of accounts an option for smaller groups

152

(1) This section applies if—

(a) group accounts are prepared for a financial year of a parent charity under section 138(2), and

(b) section 151 (audit of accounts of larger groups) does not apply in relation to that year.

(2) If—

(a) this section applies in relation to a financial year of a parent charity,

(b) the aggregate gross income of the group in that year exceeds the sum specified in section 145(1), and

the group accounts for that year must, at the election of the charity trustees of the parent charity, be examined by an independent examiner (as defined in section 145(1)(a)) or audited by a person within section 144(2)(a) or (b).

(3) Subsection (2) is subject to—

(a) subsection (4), and

(b) any order under section 153(1).

(4) If subsection (2) applies to the group accounts for a year and the aggregate gross income of the group in that year exceeds the sum specified in section 145(3), a person qualifies as an independent examiner for the purposes of subsection (2) if (and only if) the person is independent and meets the requirements of section 145(3)(a) or (b).

(5) The Commission may—

(a) give guidance to charity trustees of a parent charity in connection with the selection of a person for appointment as an independent examiner;

(b) give such directions as it thinks appropriate with respect to the carrying out of an examination in pursuance of subsection (2);

and any such guidance or directions may either be of general application or apply to a particular charity only.

(6) If—

(a) this section applies in relation to a financial year of a parent charity, and

(b) section 149 (audit or examination of English NHS charity accounts) also applies in relation to that year,

the group accounts for that year must at the election of the charity trustees of the parent charity be audited by a person, appointed by those trustees, who is within section 149(2)(a), (b) or (c); or examined by a person, appointed by those trustees, who is qualified to be an independent examiner .

Subsections (3A), (5) and (6) of section 149 apply for the purposes of this subsection as they apply for the purposes of section 149(3); except that in subsection (3A)(b) of that section the reference to “the charity trustees” is to be read as a reference to “the charity trustees of the parent charity.

(7) If—

(a) this section applies in relation to a financial year of a parent charity, and

(b) section 150 (audit or examination of Welsh NHS charity accounts) also applies in relation to that year,

the group accounts for that year must, at the election of the Auditor General for Wales, be audited or examined by the Auditor General for Wales.

References in this Act to an auditor or an examiner have effect in relation to this subsection as references to the Auditor General for Wales acting under this subsection as an auditor or examiner.

(8) If the group accounts for a financial year of a parent charity are to be examined or audited in accordance with subsection (2), section 145(1) applies in relation to the parent charity's own accounts for that year (whether or not it would otherwise so apply).

(9) Nothing in subsection (6) or (7) affects the operation of section 149(3) to (6) or (as the case may be) section 150(3) in relation to the parent charity's own accounts for the financial year in question.

Commission’s powers to order audit of group accounts

153

(1) The Commission may by order require the group accounts of a parent charity for a financial year to be audited by a person within section 144(2)(a) or (b) if it appears to the Commission that—

(a) section 151(4)(a), or (as the case may be) section 152(2), has not been complied with in relation to that year within 10 months from the end of that year, or

(b) although section 151(4)(a) does not apply to that year, it would nevertheless be desirable for the group accounts for that year to be audited by a person within section 144(2)(a) or (b).

But this subsection does not apply if section 149 or 150 (audit or examination of NHS charity accounts) applies in relation to the parent charity for that year.

(2) If the Commission makes an order under subsection (1) with respect to group accounts, the auditor must be a person appointed by the Commission unless—

(a) the order is made by virtue of subsection (1)(b), and

(b) the charity trustees of the parent charity themselves appoint an auditor in accordance with the order.

(3) The expenses of any audit carried out by an auditor appointed by the Commission under subsection (2), including the auditor's remuneration, are recoverable by the Commission—

(a) from the charity trustees of the parent charity, who are personally liable, jointly and severally, for those expenses, or

(b) to the extent that it appears to the Commission not to be practical to seek recovery of those expenses in accordance with paragraph (a), from the funds of the parent charity.

Regulations relating to audits and examinations

154

(1) The Secretary of State may by regulations make provision—

(a) specifying one or more bodies for the purposes of section 144(2)(b);

(aa) specifying one or more bodies for the purposes of section 149(2)(c);

(b) with respect to the duties of an auditor carrying out an audit of individual or group accounts, including provision with respect to the making by the auditor of a report on—

(i) the statement of accounts prepared for the financial year in question under section 132(1),

(ii) the account and statement so prepared under section 133,

(iii) the accounts so prepared under section 394 of the Companies Act 2006 (duty to prepare individual accounts), or

(iv) group accounts so prepared under section 138(2),

as the case may be;

(c) with respect to the making of a report in respect of an examination of individual or group accounts by the independent examiner or examiner who has carried out the examination;

(d) conferring on an auditor or on an independent examiner or examiner a right of access with respect to books, documents and other records (however kept) which relate to—

(i) the charity (if the audit or examination is of individual accounts), or

(ii) any member of the group (if the audit or examination is of group accounts);

(e) entitling an auditor or an independent examiner or examiner to require information and explanations from—

(i) past or present charity trustees or trustees for, or past or present officers or employees of, the charity (if the audit or examination is of individual accounts), or

(ii) past or present charity trustees or trustees for, or past or present officers or employees of, any member of the group (if the audit or examination is of group accounts);

(f) enabling the Commission, in circumstances specified in the regulations, to dispense with the requirements of section 144(2), 145(1), 151(4)(a) or 152(2)—

(i) in the case of a particular charity, or

(ii) in the case of any particular financial year of a charity.

(2) Regulations under subsection (1)(e) may in particular make, in relation to audits or examinations of group accounts, provision corresponding or similar to any provision made by section 499 or 500 of the Companies Act 2006 in connection with the rights exercisable by an auditor of a company in relation to a subsidiary undertaking of the company.

(3) In this section—

“audit of individual or group accounts” means an audit under—section 144, 145, 146, 149 or 150 (individual accounts), orsection 151, 152 or 153 (group accounts);

“examination of individual or group accounts” means an examination under—section 145, 149 or 150 (individual accounts), orsection 152 (group accounts);

and the references in this section and section 155 to an audit or examination of individual accounts and to an audit or examination of group accounts are to be read accordingly.

Power of Commission to direct compliance with certain regulations

155

If any person fails to afford an auditor or an independent examiner or examiner any facility to which the auditor, independent examiner or examiner is entitled by virtue of section 154(1)(d) or (e), the Commission, for securing that the default is made good, may by order give such directions as it thinks appropriate—

(a) to that person,

(b) if the audit or examination is of individual accounts, to the charity trustees for the time being of the charity concerned, or

(c) if the audit or examination is of group accounts, to the charity trustees for the time being of such member of the group as the Commission thinks appropriate.

Duty of auditors etc. to report matters to Commission

156

(1) This section applies to a person (“P”) who—

(a) is acting as an auditor or independent examiner appointed by or in relation to a charity under sections 144 to 146 (audit or examination of individual accounts),

(b) is acting as an auditor or examiner appointed under section 149(2) or (3) (audit or examination of English NHS charity accounts), or

(c) is the Auditor General for Wales acting under section 150(2) or (3) (audit or examination of Welsh NHS charity accounts).

(2) If, in the course of acting in the capacity mentioned in subsection (1), P becomes aware of a matter—

(a) which relates to the activities or affairs of the charity or of any connected institution or body, and

(b) which P has reasonable cause to believe is likely to be of material significance for the purposes of the exercise by the Commission of its functions under the provisions mentioned in subsection (3),

P must immediately make a written report on the matter to the Commission.

(3) The provisions are—

(a) sections 46, 47 and 50 (inquiries by Commission);

(b) sections 76 and 79 to 82 (Commission's powers to act for protection of charities).

(4) If, in the course of acting in the capacity mentioned in subsection (1), P becomes aware of any matter—

(a) which does not appear to P to be one that P is required to report under subsection (2), but

(b) which P has reasonable cause to believe is likely to be relevant for the purposes of the exercise by the Commission of any of its functions,

P may make a report on the matter to the Commission.

(5) Where the duty or power under subsection (2) or (4) has arisen in relation to P when acting in the capacity mentioned in subsection (1), the duty or power is not affected by P's subsequently ceasing to act in that capacity.

(6) Where P makes a report as required or authorised by subsection (2) or (4), no duty to which P is subject is to be regarded as contravened merely because of any information or opinion contained in the report.

Meaning of “connected institution or body” in s.156(2)

157

(1) In section 156(2) “connected institution or body”, in relation to a charity, means—

(a) an institution which is controlled by, or

(b) a body corporate in which a substantial interest is held by,

the charity or any one or more of the charity trustees acting as such.

(2) Sections 351 and 352 (meaning of controlled institution and substantial interest) apply for the purposes of subsection (1).

Application of duty in relation to auditors etc. of group accounts

158

(1) Subsections (2) to (6) of section 156 (duty of auditors etc. of individual accounts to report matters to Commission) apply in relation to a person appointed to audit, or report on, any group accounts under sections 151 to 153 as they apply in relation to the person referred to in section 156 as “P”.

(2) In section 156(2)(a), as it applies in accordance with subsection (1), the reference to the charity or any connected institution or body is to be read as a reference to the parent charity or any of its subsidiary undertakings.

Application of duty in relation to Companies Act auditors

159

(1) Sections 156(2) to (6) and 157 (duty of auditors etc. of individual accounts to report matters to Commission) apply in relation to a person acting as a Companies Act auditor of a charitable company as they apply in relation to the person referred to in section 156 as “P”, but reading any reference to P's acting in the capacity mentioned in section 156(1) as a reference to the person acting as a Companies Act auditor.

(2) In subsection (1), “Companies Act auditor” means an auditor appointed under Chapter 2 of Part 16 of the Companies Act 2006 (appointment of auditors).

Exempt and excepted charities

Exempt charities

160

(1) Nothing in sections 144 to 155 (audit or examination of accounts) applies to an exempt charity.

(2) Sections 156(2) to (6) and 157 (duty of auditors etc. of individual accounts to report matters to Commission) apply in relation to a person appointed to audit, or report on, the accounts of an exempt charity which is not a company as they apply in relation to the person referred to in section 156 as “P”, but reading—

(a) any reference to P's acting in the capacity mentioned in section 156(1) as a reference to the person acting as a person so appointed, and

(b) any reference to the Commission or to any of its functions as a reference to the charity's principal regulator or to any of the latter's functions as principal regulator in relation to the charity.

(3) Nothing in section 158 (duty of auditors etc. in relation to group accounts) applies to an exempt charity.

Excepted charities

161

(1) Nothing in sections 144 to 146 (audit or examination of individual accounts) applies to any charity which—

(a) falls within section 30(2)(d) (whether or not it also falls within section 30(2)(b) or (c)), and

(b) is not registered.

(2) Except in accordance with subsections (3) and (4), nothing in—

(a) section 154 or 155 (regulations relating to audits and examinations), or

(b) section 156 or 157 (duty of auditors etc. to report matters to Commission),

applies to a charity mentioned in subsection (1).

(3) Sections 154 to 157 apply to a charity mentioned in subsection (1) which is also—

(a) an English NHS charity (as defined in section 149), or

(b) a Welsh NHS charity (as defined in section 150).

(4) Sections 156 and 157 apply in accordance with section 160(2) to a charity mentioned in subsection (1) which is also an exempt charity.

CHAPTER 4 — Annual reports and returns and public access to accounts etc.

Annual reports etc.

Charity trustees to prepare annual reports

162

(1) The charity trustees of a charity must prepare in respect of each financial year of the charity an annual report containing—

(a) such a report by the trustees on the activities of the charity during that year, and

(b) such other information relating to the charity or to its trustees or officers,

as may be prescribed by regulations made by the Secretary of State.

(2) Regulations under subsection (1) may in particular make provision—

(a) for any such report as is mentioned in subsection (1)(a) to be prepared in accordance with such principles as are specified or referred to in the regulations;

(b) enabling the Commission to dispense with any requirement prescribed by virtue of subsection (1)(b)—

(i) in the case of a particular charity or a particular class of charities, or

(ii) in the case of a particular financial year of a charity or of any class of charities.

Transmission of annual reports to Commission in certain cases

163

(1) Where a charity's gross income in any financial year exceeds £25,000, a copy of the annual report required to be prepared under section 162 in respect of that year must be transmitted to the Commission by the charity trustees within—

(a) 10 months from the end of that year, or

(b) such longer period as the Commission may for any special reason allow in the case of that report.

(2) Where a charity's gross income in any financial year does not exceed £25,000, a copy of the annual report required to be prepared under section 162 in respect of that year must, if the Commission so requests, be transmitted to it by the charity trustees—

(a) in the case of a request made before the end of 7 months from the end of the financial year to which the report relates, within 10 months from the end of that year, and

(b) in the case of a request not so made, within 3 months from the date of the request,

or, in either case, within such longer period as the Commission may for any special reason allow in the case of that report.

(3) In the case of a charity which is constituted as a CIO—

(a) the requirement imposed by subsection (1) applies whatever the charity's gross income is, and

(b) subsection (2) does not apply.

Documents to be transmitted with annual report

164

(1) Subject to subsection (3), any copy of an annual report transmitted to the Commission under section 163 must have attached to it—

(a) a copy of the statement of accounts prepared for the financial year in question under section 132(1), or

(b) (as the case may be) a copy of the account and statement so prepared under section 133,

and a copy of the relevant auditor's or examiner's report.

(2) In subsection (1), “the relevant auditor's or examiner's report” means—

(a) if the accounts of the charity for that year have been audited under section 144, 145, 146, 149 or 150, the report made by the auditor on that statement of accounts or (as the case may be) on that account and statement;

(b) if the accounts of the charity for that year have been examined under section 145, 149 or 150, the report made by the person carrying out the examination.

(3) Subsections (1) and (2) do not apply to a charitable company, and any copy of an annual report transmitted by the charity trustees of a charitable company under section 163 must have attached to it—

(a) a copy of the company's annual accounts prepared for the financial year in question under Part 15 of the Companies Act 2006, and

(b) a copy of the relevant auditor's or examiner's report.

(4) In subsection (3), “the relevant auditor's or examiner's report” means—

(a) if the accounts of the company for that year have been audited under Part 16 of the Companies Act 2006, the report made by the auditor on those accounts;

(b) if the accounts of the company for that year have been audited under section 144, 145 or 146, the report made by the auditor on those accounts;

(c) if the accounts of the company for that year have been examined under section 145, the report made by the person carrying out the examination.

Preservation of annual reports etc.

165

(1) Any copy of an annual report transmitted to the Commission under section 163, together with the documents attached to it, is to be kept by the Commission for such period as it thinks fit.

(2) The charity trustees of a charity must preserve for at least 6 years from the end of the financial year to which it relates an annual report prepared by them under section 162(1) if they have not been required to transmit a copy of it to the Commission.

(3) Subsection (4) applies if a charity ceases to exist within the period of 6 years mentioned in subsection (2) as it applies to any annual report.

(4) The obligation to preserve the annual report in accordance with subsection (2) must continue to be discharged by the last charity trustees of the charity, unless the Commission consents in writing to the annual report being destroyed or otherwise disposed of.

Annual reports and group accounts

166

(1) This section applies where group accounts are prepared for a financial year of a parent charity under section 138(2).

(2) The annual report prepared by the charity trustees of the parent charity in respect of that year under section 162 must include—

(a) such a report by the trustees on the activities of the charity's subsidiary undertakings during that year, and

(b) such other information relating to any of those undertakings,

as may be prescribed by regulations made by the Secretary of State.

(3) Regulations under subsection (2) may in particular make provision—

(a) for any such report as is mentioned in subsection (2)(a) to be prepared in accordance with such principles as are specified or referred to in the regulations;

(b) enabling the Commission to dispense with any requirement prescribed by virtue of subsection (2)(b) in the case of—

(i) a particular subsidiary undertaking, or

(ii) a particular class of subsidiary undertakings.

(4) Section 163 (transmission of annual report to Commission in certain cases) applies in relation to the annual report referred to in subsection (2) as if any reference to the charity's gross income in the financial year in question were a reference to the aggregate gross income of the group in that year.

(5) When transmitted to the Commission in accordance with subsection (4), the copy of the annual report must have attached to it both a copy of the group accounts prepared for that year under section 138(2) and—

(a) a copy of the report made by the auditor on those accounts, or

(b) if those accounts have been examined under section 152, a copy of the report made by the person carrying out the examination.

(6) The requirements in this section are in addition to those in sections 162 to 165.

Exempt charities

167

Nothing in sections 162 to 166 (annual reports etc.) applies to any exempt charity.

Excepted charities

168

(1) Nothing in sections 162 to 165 (annual reports etc.) applies to any charity which—

(a) falls within section 30(2)(d) (whether or not it also falls within section 30(2)(b) or (c)), and

(b) is not registered.

(2) Except in accordance with subsection (5), nothing in sections 162 to 165 applies to any charity which—

(a) falls within section 30(2)(b) or (c) but does not fall within section 30(2)(d), and

(b) is not registered.

(3) If requested to do so by the Commission, the charity trustees of any such charity as is mentioned in subsection (2) must prepare an annual report in respect of such financial year of the charity as is specified in the Commission's request.

(4) Any report prepared under subsection (3) must contain—

(a) such a report by the charity trustees on the activities of the charity during the year in question, and

(b) such other information relating to the charity or to its trustees or officers,

as may be prescribed by regulations made under section 162(1) in relation to annual reports prepared under section 162(1).

(5) The following provisions apply in relation to any report required to be prepared under subsection (3) as if it were an annual report required to be prepared under section 162(1)—

(a) section 163(1) (transmission of annual report in certain cases), with the omission of the words preceding “a copy of the annual report”, and

(b) sections 164 (documents to be transmitted with annual report) and 165(1) (preservation of annual reports etc.).

(6) Subsections (7) and (8) apply where—

(a) a charity is required to prepare an annual report in respect of a financial year by virtue of subsection (3),

(b) the charity is a parent charity at the end of the year, and

(7) When transmitted to the Commission in accordance with subsection (5), the copy of the annual report must have attached to it both a copy of the group accounts and—

(a) a copy of the report made by the auditor on those accounts, or

(b) if those accounts have been examined under section 152, a copy of the report made by the person carrying out the examination.

(8) The requirement in subsection (7) is in addition to that in subsection (4).

Annual returns

Annual returns by registered charities

169

(1) Subject to subsection (2), every registered charity must prepare in respect of each of its financial years an annual return in such form, and containing such information, as may be prescribed by regulations made by the Commission.

(2) Subsection (1) does not apply in relation to any financial year of a charity in which the charity's gross income does not exceed £10,000 (but this subsection does not apply if the charity is constituted as a CIO).

(3) Any such return must be transmitted to the Commission by the date by which the charity trustees are, by virtue of section 163(1), required to transmit to the Commission the annual report required to be prepared in respect of the financial year in question.

(4) The Commission may dispense with the requirements of subsection (1)—

(a) in the case of a particular charity or a particular class of charities, or

(b) in the case of a particular financial year of a charity or of any class of charities.

Availability of documents to public

Public inspection of annual reports etc. kept by Commission

170

Any document kept by the Commission in pursuance of section 165(1) (preservation of annual reports etc.) must be open to public inspection at all reasonable times—

(a) during the period for which it is so kept, or

(b) if the Commission so determines, during such lesser period as it may specify.

Supply by charity trustees of copy of most recent annual report

171

(1) This section applies if an annual report has been prepared in respect of any financial year of a charity in pursuance of section 162(1) or 168(3).

(2) If the charity trustees of a charity—

(a) are requested in writing by any person to provide that person with a copy of its most recent annual report, and

(b) are paid by that person such reasonable fee (if any) as they may require in respect of the costs of complying with the request,

they must comply with the request within the period of 2 months beginning with the date on which it is made.

(3) The reference in subsection (2) to a charity's most recent annual report is a reference to the annual report prepared in pursuance of section 162(1) or 168(3) in respect of the last financial year of the charity in respect of which an annual report has been so prepared.

Supply by charity trustees of copy of most recent accounts

172

(1) If the charity trustees of a charity—

(a) are requested in writing by any person to provide that person with a copy of the charity's most recent accounts, and

(b) are paid by that person such reasonable fee (if any) as they may require in respect of the costs of complying with the request,

they must comply with the request within the period of 2 months beginning with the date on which it is made.

(2) The reference in subsection (1) to a charity's most recent accounts is—

(a) in the case of a charity other than one falling within paragraph (b) or (c), a reference to—

(i) the statement of accounts prepared in pursuance of section 132(1), or

(ii) the account and statement prepared in pursuance of section 133,

in respect of the last financial year of the charity in respect of which a statement of accounts or account and statement has or have been so prepared;

(b) in the case of a charitable company, a reference to the most recent annual accounts of the company prepared under Part 16 of the Companies Act 2006 in relation to which any of the following conditions is satisfied—

(i) they have been audited,

(ii) they have been examined by an independent examiner under section 145(1)(a), or

(iii) they relate to a year in respect of which the company is exempt from audit under Part 16 of the Companies Act 2006 and neither section 144(2) nor section 145(1) applied to them, and

(c) in the case of an exempt charity, a reference to the accounts of the charity most recently audited in pursuance of any statutory or other requirement or, if its accounts are not required to be audited, the accounts most recently prepared in respect of the charity.

(3) In subsection (1), the reference to a charity's most recent accounts includes, in relation to a charity whose charity trustees have prepared any group accounts under section 138(2), the group accounts most recently prepared by them.

Offences

Offences of failing to supply certain documents

173

(1) If any requirement within subsection (2) is not complied with, each person who immediately before the specified date for compliance was a charity trustee of the charity is guilty of an offence.

(2) A requirement is within this subsection if it is imposed—

(a) by section 163 or by virtue of section 166(4) (requirements to transmit annual report to Commission), taken with sections 164, 166(5) and 168(7) (documents to be supplied with annual report), as applicable,

(b) by section 169(3) (requirement to transmit annual return to Commission),

(d) by section 172(1) or by virtue of section 172(3) (supply by charity trustees of copy of most recent accounts);

and in subsection (1) “the specified date for compliance” means the date for compliance specified in the section in question.

(3) It is a defence, where a person is charged with an offence under subsection (1), to prove that the person took all reasonable steps for securing that the requirement in question would be complied with in time.

(4) A person guilty of an offence under subsection (1) is liable on summary conviction to—

(a) a fine not exceeding level 4 on the standard scale, and

(b) for continued contravention, a daily default fine not exceeding 10% of level 4 on the standard scale for so long as the person in question remains a charity trustee of the charity.

CHAPTER 5 — Powers to set financial thresholds

Powers to alter certain sums specified in this Part

174

(1) The Secretary of State may by order amend any provision listed in subsection (2)—

(a) by substituting a different sum for the sum for the time being specified in that provision, or

(b) if the provision specifies more than one sum, by substituting a different sum for any sum specified in that provision.

(2) The provisions are—

section 133 (gross income in connection with option to prepare account and statement instead of statement of accounts);

section 144(1)(a) or (b) (gross income and value of assets in connection with requirements as to audit of larger charities);

section 145(1) (gross income in connection with option to have accounts examined instead of audited);

section 145(3) (gross income in connection with requirements as to qualifications of independent examiner);

section 163(1) or (2) (gross income in connection with requirements to transmit annual report to Commission);

section 169(2) (gross income in connection with requirement to prepare annual return).

Aggregate gross income of group

175

The Secretary of State may by regulations make provision for determining for the purposes of this Part the amount of the aggregate gross income for a financial year of a group consisting of a parent charity and its subsidiary undertaking or undertakings.

Larger groups: “relevant income threshold” and “relevant assets threshold”

176

(1) The reference to the relevant income threshold in paragraph (a) or (b) of section 151(1) is a reference to the sum prescribed as the relevant income threshold for the purposes of that paragraph.

(2) The reference to the relevant assets threshold in paragraph (b) of section 151(1) is a reference to the sum prescribed as the relevant assets threshold for the purposes of that paragraph.

(3) “Prescribed” means prescribed by regulations made by the Secretary of State.

Part 9 — Charity trustees, trustees and auditors etc.

Meaning of “charity trustees”

177

In this Act, except in so far as the context otherwise requires, “charity trustees” means the persons having the general control and management of the administration of a charity.

Disqualification of charity trustees and trustees

Persons disqualified from being charity trustees or trustees of a charity

178

(1) A person (“P”) is disqualified from being a charity trustee or trustee for a charity in the following cases—

Case AP has been convicted of—an offence specified in section 178A;an offence, not specified in section 178A, that involves dishonesty or deception.

Case BP has been made bankrupt or sequestration of P's estate has been awarded and (in either case)—P has not been discharged, orP is the subject of a bankruptcy restrictions order or an interim order.

Case CP has made a composition or arrangement with, or granted a trust deed for, creditors and has not been discharged in respect of it.

Case DP has been removed as a trustee, charity trustee, officer, agent or employee of a charity by an order made—by the Commission under section 79(4) or by the Commission or the Commissioners under a relevant earlier enactment (as defined by section 179(5)), orby the High Court,on the ground of any misconduct or mismanagement in the administration of the charity for which P was responsible or which P knew of and failed to take any reasonable step to oppose, or which P's conduct contributed to or facilitated.

Case EP has been removed, under section 34(5)(e) of the Charities and Trustee Investment (Scotland) Act 2005 (asp 10) (powers of the Court of Session) or the relevant earlier legislation (as defined by section 179(6)), from being concerned in the management or control of any body.

Case FP is subject to—a disqualification order or disqualification undertaking under the Company Directors Disqualification Act 1986 or the Company Directors Disqualification (Northern Ireland) Order 2002 (S.I. 2002/3150 (N.I.4)), oran order made under section 429(2) of the Insolvency Act 1986 (disabilities on revocation of county court administration order).

Case GP is subject to—a moratorium period under a debt relief order under Part 7A of the Insolvency Act 1986; ora debt relief restrictions order or interim order under Schedule 4ZB to that Act

Case HP has been found to be in contempt of court under Civil Procedure Rules for—making a false disclosure statement, or causing one to be made, ormaking a false statement in a document verified by a statement of truth, or causing one to be made.

Case IP has been found guilty of disobedience to an order or direction of the Commission on an application to the High Court under section 336(1).

Case JP is a designated person for the purposes of—. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . regulations 8 to 12 of the ISIL (Da'esh) and Al-Qaida (United Nations Sanctions) (EU Exit) Regulations 2019 (S.I. 2019/466), regulations 11 to 15 of the Counter-Terrorism (International Sanctions) (EU Exit) Regulations 2019 (S.I. 2019/573), or regulations 11 to 15 of the Counter-Terrorism (Sanctions) (EU Exit) Regulations 2019 (S.I. 2019/577).

Case KP is subject to the notification requirements of Part 2 of the Sexual Offences Act 2003.

(2) Subsection (1) is subject to sections 179 to 181.

(3) While a person is disqualified under this section in relation to a charity, the person is also disqualified from holding an office or employment in the charity with senior management functions.

(4) A function of an office or employment held by a person “(A)” is a senior management function if—

(a) it relates to the management of the charity, and A is not responsible for it to another officer or employee (other than a charity trustee or trustee for the charity), or

(b) it involves control over money and the only officer or employee (other than a charity trustee or trustee for the charity) to whom A is responsible for it is a person with senior management functions other than ones involving control over money.

Disqualification: pre-commencement events etc.

179

(1) Case A—

(a) applies whether the conviction occurred before or after the commencement of section 178(1) or section 178A or any amendment of that section , but

(b) does not apply in relation to any conviction which is a spent conviction for the purposes of the Rehabilitation of Offenders Act 1974.

(2) Case B applies whether the making bankrupt or the sequestration or the making of a bankruptcy restrictions order or an interim order occurred before or after the commencement of section 178(1).

(3) Case C applies whether the composition or arrangement was made, or the trust deed was granted, before or after the commencement of section 178(1).

(4) Cases D to F apply in relation to orders made and removals effected before or after the commencement of section 178(1).

(5) In Case D—

(a) “the Commissioners” means the Charity Commissioners for England and Wales, and

(b) “relevant earlier enactment” means—

(i) section 18(2)(i) of the Charities Act 1993 (power to act for protection of charities),

(ii) section 20(1A)(i) of the Charities Act 1960, or

(iii) section 20(1)(i) of the 1960 Act (as in force before the commencement of section 8 of the Charities Act 1992).

(6) In Case E, “the relevant earlier legislation” means section 7 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 (powers of Court of Session to deal with management of charities).

(7) Case H does not apply in relation to a finding of contempt which, if it had been a conviction for which P was dealt with in the same way, would be a spent conviction for the purposes of the Rehabilitation of Offenders Act 1974.

Disqualification: exceptions in relation to charitable companies

180

(1) Where (apart from this subsection) a person (“P”) is disqualified under Case B or G from being a charity trustee or trustee for a charitable company or a CIO, P is not so disqualified if leave has been granted under section 11 of the Company Directors Disqualification Act 1986 (undischarged bankrupts) for P to act as director of the company or charity trustee of the CIO (as the case may be).

(2) Similarly, a person (“P”) is not disqualified under Case F from being a charity trustee or trustee for a charitable company or a CIO if, in a case set out in the first column of the table, leave has been granted as mentioned in the second column for P to act as director of the company or charity trustee of the CIO (as the case may be)—

P is subject to a disqualification order or disqualification undertaking under the Company Directors Disqualification Act 1986.	Leave has been granted for the purposes of section 1(1)(a) or 1A(1)(a) of the 1986 Act.
P is subject to a disqualification order or disqualification undertaking under the Company Directors Disqualification (Northern Ireland) Order 2002 (S.I. 2002/3150 (N.I.4)).	Leave has been granted by the High Court in Northern Ireland.
P is subject to an order under section 429(2) of the Insolvency Act 1986.	Leave has been granted by the court which made the order.

Power to waive disqualification

181

(1) This section applies where a person (“P') is disqualified under section 178(1).

(2) The Commission may, if P makes an application under this subsection, waive P's disqualification—

(a) generally, or

(b) in relation to a particular charity or a particular class of charities.

(2A) A waiver under subsection (2)—

(a) may relate to the whole of P's disqualification or only to disqualification under section 178(3);

(b) in relation to disqualification under section 178(3) may relate to a particular office or employment or to any office or employment of a particular description.

(3) If—

(a) P is disqualified under Case D , E or I and makes an application under subsection (2) 5 years or more after the date on which the disqualification took effect, and

(b) the Commission is not prevented from granting the application by subsection (5),

the Commission must grant the application unless satisfied that, because of any special circumstances, it should be refused.

(4) Any waiver under subsection (2) must be notified in writing to P.

(5) No waiver may be granted under subsection (2) in relation to any charitable company or CIO if—

(a) P is for the time being prohibited from acting as director of the company or charity trustee of the CIO (as the case may be), by virtue of—

(i) a disqualification order or disqualification undertaking under the Company Directors Disqualification Act 1986, or

(ii) a provision of the 1986 Act mentioned in subsection (6), and

(b) leave has not been granted for P to act as director of any company or charity trustee of any CIO.

(6) The provisions of the 1986 Act are—

section 11(1) (undischarged bankrupts);

section 12(2) (failure to pay under county court administration order);

section 12A (Northern Irish disqualification orders);

section 12B (Northern Irish disqualification undertakings).

Records of persons removed from office

182

(1) For the purposes of sections 178 to 181A the Commission must keep, in such manner as it thinks fit, a register of the following.

(1A) The register must include all persons who have been removed from office as mentioned in Case D—

(a) by an order of the Commission or the Commissioners made before or after the commencement of section 178(1), or

(b) by an order of the High Court made after the commencement of section 45(1) of the Charities Act 1992;

and, where any person is so removed from office by an order of the High Court, the court must notify the Commission of the person's removal.

(1B) The register must include all persons who have been disqualified by an order of the Commission under section 181A.

(1C) The register must include all persons who have been removed from office by an order of the Commission under section 79A (removal of disqualified trustee).

(2) The entries in the register kept under subsection (1) must be available for public inspection in legible form at all reasonable times.

(3) In this section “the Commissioners” means the Charity Commissioners for England and Wales.

Criminal consequences of acting while disqualified

183

(1) Subject to subsection (2), it is an offence for any person to act as a charity trustee or trustee for a charity or to hold an office or employment while disqualified from being such a trustee or from holding that office or employment by virtue of section 178 or an order under section 181A.

(2) Subsection (1) does not apply if—

(a) the charity concerned is a company or a CIO, and

(b) the disqualified person is disqualified by virtue only of Case B , F or G in section 178.

(3) A person guilty of an offence under subsection (1) is liable—

(a) on summary conviction, to imprisonment for a term not exceeding the general limit in a magistrates’ court or to a fine not exceeding the statutory maximum, or both;

(b) on conviction on indictment, to imprisonment for a term not exceeding 2 years or to a fine, or both.

Civil consequences of acting while disqualified

184

(1) Any acts done as charity trustee or trustee for a charity or as officer or employee of a charity by a person disqualified from being such a trustee or from holding that office or employment by virtue of section 178 or an order under section 181A are not invalid merely because of that disqualification.

(2) Subsection (3) applies if the Commission is satisfied that any person—

(a) has acted as charity trustee or trustee for a charity or as officer or employee of a charity while disqualified from being such a trustee or from holding that office or employment by virtue of section 178 or an order under section 181A, and

(b) while so acting, has received from the charity any sums by way of remuneration or expenses, or any benefit in kind, in connection with acting as charity trustee or trustee for the charity or holding the office or employment .

(3) The Commission may by order direct the person—

(a) to repay to the charity the whole or part of any such sums, or

(b) (as the case may be) to pay to the charity the whole or part of the monetary value (as determined by the Commission) of any such benefit.

(4) Subsection (3) does not apply to any sums received by way of remuneration or expenses in respect of any time when the person concerned was not disqualified from being a charity trustee or trustee for the charity.

Remuneration of charity trustees and trustees etc.

Remuneration of charity trustees or trustees etc. providing services to charity

185

(1) This section applies to remuneration for goods or services provided by a person (“P”) to or on behalf of a charity where—

(a) P is a charity trustee or trustee for the charity, or

(b) P is connected with a charity trustee or trustee for the charity and the remuneration might result in that trustee obtaining any benefit.

This is subject to subsection (3).

(2) If Conditions A to D are met in relation to remuneration within subsection (1), P is entitled to receive the remuneration out of the funds of the charity.

Condition ACondition A is that the amount or maximum amount of the remuneration—is set out in an agreement in writing between the charity or its charity trustees (as the case may be) and P under which P is to provide the goods or services, or goods and services, in question to or on behalf of the charity, anddoes not exceed what is reasonable in the circumstances for the provision by P of the goods or services, or goods and services, in question.

Condition BCondition B is that, before entering into that agreement, the charity trustees decided that they were satisfied that it would be in the best interests of the charity for the goods or services, or goods and services, to be provided by P to or on behalf of the charity for the amount or maximum amount of remuneration set out in the agreement.

Condition CCondition C is that if immediately after the agreement is entered into there is, in the case of the charity, more than one person who is a charity trustee and is—a person in respect of whom an agreement within Condition A is in force,a person who is entitled to receive remuneration out of the funds of the charity otherwise than by virtue of such an agreement, ora person connected with a person falling within paragraph (a) or (b),the total number of them constitute a minority of the persons for the time being holding office as charity trustees of the charity.

Condition DCondition D is that the trusts of the charity do not contain any express provision that prohibits P from receiving the remuneration.

(3) This section does not apply to any remuneration for services provided by a person in the person’s capacity as a charity trustee or trustee for a charity or under a contract of employment.

(3A) Any entitlement to receive remuneration under subsection (2) is in addition to and does not affect any entitlement to receive the remuneration by virtue of—

(a) any provision contained in the trusts of the charity;

(b) any order of the court or the Commission;

(4) Before entering into an agreement within Condition A the charity trustees must have regard to any guidance given by the Commission concerning the making of such agreements.

(5) The duty of care in section 1(1) of the Trustee Act 2000 applies to a charity trustee when making such a decision as is mentioned in Condition B.

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