Three initiatives to make it easier for charities to register, file accounts and change their legal status have been delayed.
During the last Parliament it was announced that the Charity Commission and Companies House were working on a way make it possible for charities to only have to file their annual accounts in one place.
It was also announced that the commission and HM Revenue and Customs were working on a joint registration portal – so that charities did not have to register separately with commission as a charity and with HMRC to be able to claim Gift Aid.
There also been another delay to introducing legislation needed to allow charities to become charitable incorporated organisations – a legal form, which was introduced in 2013 and is currently only available to charities.
It had initially been expected that existing charities would be able to convert to CIO status in 2014 but it has been delayed a number of times and is now not expected until later this year.
Accounts filing
At the moment incorporated charities have to file their annual accounts with both the Charity Commission and Companies House.
In 2012 Companies House and the Charity Commission said they were working on a solution.
A commission spokeswoman said: “We continue to work with Companies House to explore our jointly developing a report and accounts template and a filing solution whereby charities can file their accounts with Companies House who would then forward them to us.
“There is no fixed timeframe for implementing this, and it is dependent on Companies House being able to offer the report and accounts template as part of their suite of filing solutions supported by the electronic reporting format known as iXBRL and charities choosing to file using this option when it is offered.”
Registration
Charities that claim Gift Aid or other tax reliefs also have to register separately with HMRC.
A joint registration system between the commission and HMRC was initiallly expected in 2013. It was then delayed until 2015 and then 2016. Documents published alongside the Budget last year said it had been delayed until April this year.
There has been no further detail announced and when Civil Society News asked for an updated HMRC did not reveal what deadline it is currently working towards.
An HMRC spokesman said: “We continue to work closely with the Charity Commission for England and Wales (CCEW) to reduce administrative burdens on charities, including on a registration system that will allow charities to register with both CCEW and HMRC at the same time.”
CIO conversion
The CIO legal structure was introduced in 2013. It grants organisations charitable status, and also confers limited liability and legal personality, but does not require the organisation to register with Companies House or comply with some aspects of company law.
According to the government up to 12,000 existing charities are expected to convert to the CIO form over ten years. It estimates switching to the CIO form could have indirect cost savings of £932 per converted charity per year.
Unincorporated charities have been able to become CIOs for three years and new organisations can register as CIOs but the only way for existing charitable companies limited by guarantee to become a CIO is to close the charitable company and set up a new CIO.
Community interest companies - a legal form often used by social enterprises - cannot convert to CIO status either. The timetable and process to enable them to convert is expected to begin once charitable companies have had the opportunity.
Provisions in the Charities Act 2011 allow all these groups to convert, but the Office for Civil Society must introduce further regulations before they are allowed to do so.
The date for these regulations to be introduced has never been confirmed but was initially expected to be in early 2014.
Last April the Office for Civil Society launched a consultation on the draft regulation. The timetable outlined then said that it expected to introduce conversion for larger charitable companies by 1 October last year and that the process would be open to all by July 2017.
The consultation closed on 20 June 2016 and no government response has been published.
A spokeswoman for the OCS said: “Charities are not able to convert to CIO status yet but we expect the secondary legislation needed for these provisions to be laid in Parliament soon. We also plan to set out a provisional timetable for conversions along with a summary of consultation responses."
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