How to Avoid Defaulting in OSCR
OSCR Defaulting Charities Procedure
Here is an updated guide for defaulted or defaulting charities, following recent changes in charity law. This FAQ and guide will ensure you are prepared for the process of submitting your reports to OSCR in future.
Annual Monitoring – The Role of OSCR
OSCR is required to monitor, encourage and facilitate charities’ compliance with charity law and to increase public confidence in charities. It is a legal requirement for all charities to complete an annual return each year and to send a copy of their accounts to OSCR. Without the information there’s no evidence to show OSCR and others that you are carrying out activities and providing public benefit.
What to do if your charity has not submitted annual information
- You must submit your accounts now.
- Make sure your charity’s details are up to date.
- Contact OSCR if your charity only has annual reports and accounts for some years but not others.
- Contact OSCR if your charity has stopped operating.
- Contact OSCR if your charity still operating but no longer wishes to be a charity.
Overview
OSCR (Office of the Scottish Charity Regulator) has recently started to access new legal powers to remove defaulting charities from the register. This is part of the 2023 amendment to the 2005 Charities Act (Charities and Trustee Investment (Scotland) Act 2005). If you are part of a defaulting organisation, or think you might be, you’ll need to get in contact with OSCR as soon as possible. Defaulting organisations who have engaged with OSCR in the past few months have been able to avoid being removed from the register.
Please contact OSCR immediately if you have any updates about your charity’s status or any further queries:
Telephone – 01382 220446
Email – defaulting@oscr.org.uk
What information do you need to send?
Every year you must complete your online annual return and with this you must send your:
- Annual accounts
- Trustees’ Annual Report
- External scrutiny report
The information collected from the online annual return helps OSCR maintain an accurate Scottish Charity Register and allows them to monitor and regulate charities operating in Scotland.
When do you need to send the information?
You have nine months from your financial year end date to send the information:
What are the risks of failing to submit?
Failing to submit your annual return and accounts can seriously affect your reputation as a charity.
If a charity is late or has not submitted their annual information at all, this can:
- · Decrease public confidence in your charity
- · Affect your ability to get funding from the public or funding bodies
- · Damage your reputation as a trustworthy charity
- · Affect whether potential donors choose to support your charity or not
What happens if the information is not sent?
Once the deadline date has passed you are late in providing the information. A red line and the number of days your charity is late by will appear on your Scottish Charity Register entry to highlight this to the public and others, such as funders.
This red line will come off when your return is up to date. However, your annual return submission history will continue to show late returns for five years by highlighting the date received in red.
OSCR’s aim is to achieve compliance, so they will send you reminder emails until 10 weeks after your deadline date. After this point the charity is classed as defaulting.
What if the information is not sent within 10 weeks of the deadline date?
If your information is not sent to OSCR within 10 weeks of the deadline date the charity will be shown as defaulting on the Scottish Charity Register. This means the charity has defaulted on the legal requirement to provide OSCR with annual reports and accounts, which is a breach of the charity trustees’ duties. This is misconduct and they have powers to take action against charity trustees where appropriate and proportionate.
If a charity fails to submit accounts to OSCR then they have the power to remove the charity from the Register under section 45A of the Charities and Trustee Investment (Scotland) Act 2005.
What action does OSCR take?
Throughout the year, OSCR send out regular reminders to all charities to encourage them to submit their annual information within the nine month deadline. They also send several emails to charities when they have failed to submit on time. Here are further guidelines from OSCR about what happens to defaulting charities:
“If a charity still fails to submit its annual return, we will consider it to be ‘defaulting’. We will then carry out checks to find out if the charity is still active:
1. If the charity still appears to be operational, we will try using different contact methods to get in touch with the charity.
2. If we find no evidence the charity is active, we will consider using our legal powers to remove the charity from the Scottish Charity Register on the basis that it no longer meets the charity test.“
Source: OSCR | What happens when a charity doesn’t submit their annual report and accounts on time?
Inactive and Former Charities
“In general, if a charity does nothing for a prolonged period, it is unlikely to be providing public benefit, and this may result in it failing the charity test. There are some exceptions where this principle does not apply. We call these ‘inactive charities’.
If your charity is removed from the Register, you must still prepare and submit accounts to us for any outstanding charity assets held at the time of removal. Read our Former Charities page for more information.”
Source: OSCR | Annual monitoring
Where to get further support
- If your charity is struggling, or ready for a big change, contact the Decelerator Project. The Decelerator is a free support service for civil society organisations. They offer information, tools and hands-on support for better endings. In their words, they ‘exist because endings are inevitable, but bad endings don’t have to be.’
- OSCR also offers guidance on Managing a Charity
- SCVO has support for Running your organisation