Charities Act 2006 - provisions now brought into force

The first round of provisions of the Charities Act 2006 came into force for charities in England and Wales on 27th February.

What provisions will have the most impact on charities and on trustees?

• The income threshold above which a charity must have a professional audit is being raised from £250,000 to £500,000 (sections 28 and 32)

• Where it is in the charity’s best interests and subject to certain safeguards, trustees will be able to purchase trustee indemnity insurance with the charity’s money to indemnify them against personal liability where they have acted in good faith.(section 39)

• The Charity Commission will have the power to relieve trustees (and charity auditors or independent examiners) of personal liability where they have acted honestly and reasonably, and ought fairly to be excused. (section 38)

• Trustees are already required to provide a copy of the charity’s most recent accounts to anyone on request, although they can charge a reasonable fee to cover costs. The Act extends this existing provision to cover the charity’s most recent annual report. (Paragraph 140 of Schedule 8)

• The existing offence for persistent failure to submit the trustees’ annual return, including copies of the accounts and annual report to the Charity Commission is updated. Under the revised offence each trustee could be liable to prosecution for failure to meet the requirement, and a daily default fine for contravention is introduced. The new offence will apply where the requirement arises on or after 1 April 2008. (Paragraph 142 of Schedule 8)

For further details and to see the provisions in full, go to http://www.cabinetoffice.gov.uk/third_sector/law_and_regulation/charities_act_2006/implementation.asp