DMBM585220 - Pre-enforcement: consider the defaulter: charities
The majority of this manual will be archived on 1 July 2024. If there is content within this manual you use regularly, email hmrcmanualsteam@hmrc.gov.uk to let us know.
Types of charity
A charity can be either:
- a charitable company
- an unincorporated charity/charitable association.
It is therefore necessary to establish beyond doubt the type of charity you are dealing with before taking action.
Charitable company
A charitable company means a charity which is a company formed and registered under the Companies Acts or to which the provisions of the Acts apply.
Where a charity is a company incorporated under the Companies Acts, the company is liable for the debts incurred. The directors have no personal liability for the company’s debts, but you can still write to them or interview them.
Charitable companies are “legal persons” and where there are sufficient assets you can distrain on these companies. County court proceedings can also be taken against such charitable companies, just as you would with any other company.
Where, in England & Wales, county court proceedings are taken you can warn the directors that you may consider applying to the court for an order to obtain information from an officer of a judgment debtor company. This means that they will have to attend court to answer questions, on oath, as to the company’s ability to pay the judgment debt (see DMBM666570).
In Scotland summary warrant action may be appropriate, or the case may be appropriate for referral direct to EIS Edinburgh.
Unincorporated charity/charitable association
An unincorporated charity means a charitable trust or association. Unless individual members of an unincorporated association have entered into an agreement with HMRC in their personal capacity (in connection with the activities of the unincorporated association) there is no scope for recovery from members of an unincorporated charitable association personally.
However, charity trustees (who may also be members) have a greater role and have a duty to act prudently in administering the affairs of the charity and are responsible for ensuring that a charity fulfils its legal obligations. As such, trustees can be held personally accountable for properly determined liabilities of a charitable trust in most instances.
Recovery action
England & Wales
You will find the Charity Commission website, is a useful place to look for information about a charity. The website will frequently give you details of the charity’s own website and a contact name and address for communications with the charity, which may be different from the name/address we have on file.
The Charity Commission website will also give you details of the names (but not the addresses) of the trustees of the charity and access to the charity’s accounts. You should email Charities DMB-RIS, Risk Team Mailbox (WMBC CPCE Operational Risk) with details of the debt and the charity’s registered number, if you need the trustees’ addresses. You must not make a direct approach to the Charity Commission for information concerning a charity, or a charity’s trustees, under any circumstances.
(This content has been withheld because of exemptions in the Freedom of Information Act 2000). You should do all you can to obtain voluntary settlement including, where appropriate, exploring coming to an arrangement with the trustees for payment of the debt within a reasonable timescale. You should not rule out making an arrangement for payment simply because an arrangement has been made for a previous debt, nor because any request is made at the last possible moment.
But if the trustees ignore you and continue accruing further debt, or you consider the proposals for payment are unreasonable, then you can tell the trustee(s) that you intend to approach the Charity Commission for assistance in securing payment of the debt.
(This content has been withheld because of exemptions in the Freedom of Information Act 2000) Charities, Risk Team Mailbox (WMBC CPCE Operational Risk) (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Scotland
You will find the Office of the Scottish Charity Regulator (OSCR) website, is a useful place to look for information about a charity. The website will frequently give you details of the charity’s own website and a contact name and address for communications with the charity, which may be different from the name and address we have on file.
The OSCR website may also give you details of the charity’s income and expenditure from their submitted accounts. However, it will not supply the names or addresses of the trustees. This information may be available on the charity’s own website or obtained from the charity on request.
(This content has been withheld because of exemptions in the Freedom of Information Act 2000)You should do all you can to obtain voluntary settlement including, where appropriate, exploring coming to an arrangement with the trustees for payment of the debt within a reasonable timescale. You should not rule out making an arrangement for payment simply because an arrangement has been made for a previous debt, nor because any request is made at the last possible moment.
But if the trustees ignore you and continue accruing further debt, or you consider the proposals for payment are unreasonable, then you can tell the trustee(s) that you intend to approach the Charity Commission for assistance in securing payment of the debt.
(This content has been withheld because of exemptions in the Freedom of Information Act 2000) Charities, Risk Team Mailbox (WMBC CPCE Operational Risk) (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Northern Ireland
The Charity Commission for Northern Ireland is the new independent regulator for charities in Northern Ireland but it has not yet begun to register charities. However, it contains a ‘deemed’ list of organisations in Northern Ireland to whom its powers apply. This list provides some basic information such as the organisation’s website and annual income and occasionally an email address.
(This content has been withheld because of exemptions in the Freedom of Information Act 2000) You should do all you can to obtain voluntary settlement including, where appropriate, exploring coming to an arrangement with the trustees for payment of the debt within a reasonable timescale. You should not rule out making an arrangement for payment simply because an arrangement has been made for a previous debt, nor because any request is made at the last possible moment.