Withers Responds To The Consultation Of The Charity Commission Of England And Wales On The Annual Return 2023-25

• Published date: 28 September 2022
• Subject Matter: orporate/Commercial Law, Charities & Non-Profits
• Law Firm: Withers LLP
• Author: Mr Amy Carter

As we reported previously, the Charity Commission has been consulting over the summer on proposed changes to the Annual Return for 2023-25. The Annual Return is the annual compliance filing which all CIOs and all other registered charities with an annual income of over '10,000 must submit to the Charity Commission within 10 months of their financial year end. Over the years, the Charity Commission has added questions - with increasing complexity and analysis required to answer them.

Having taken soundings from our Charity clients and sector bodies, as well as drawing on our team's extensive experience of submitting Annual Returns - both on behalf of clients and in our personal capacity as trustees of a range of charities - we submitted our response to the Charity Commission earlier this month.

In the latest proposed revisions, the Charity Commission has proposed extensive amendments to the questions asked in the Annual Return - including nearly doubling the number of questions which charities are required to answer. We have summarised below the key points from our response, with our full response available here.

Role of the Annual Return

The Annual Return is a regulatory filing, the obligation on registered charities to file the Annual Return flowing from s169 Charities Act 2011. Many of the new questions seek to gather information about the sector for the Charity Commission's policy purposes, rather than for regulatory purposes relating to the specific charity filing the Annual Return. Whilst we appreciate that the Annual Return has the advantage of being compulsory and can therefore provide an opportunity for the Charity Commission to obtain up-to-date data from the majority sector (exempt and excepted charities, as well as those below the registration threshold do not file Annual Returns), it is not appropriate and proportionate to increase the administrative burden on charities for that purpose; particularly in the current financial climate. In our experience, most charities will need to make significant changes to their financial reporting mechanisms to be able to collect the data requested by the revised Annual Return. That burden will fall disproportionately on smaller charities

Instead, data collected for the purpose of supporting the Charity Commission's policy work should be collected separately (perhaps in conjunction with sector bodies), leaving the Annual Return to focus solely on information the Commission needs (and will use) to regulate...