KHCS | UK & International Corporate Consultancy
Charity Registrations
 
 
KHCS has developed an expertise to assist clients in establishing charitable organisations to meet the various needs of the community in the UK and within international groups. This will include setting up a company, registering it with the Charity Commission, and with HMRC so that they can claim gift aid relief on donations from individuals.

It is beneficial to form a limited Company before registering for a charity. This is usually done by setting up a company limited by guarantee, rather than the normal incorporation of limited by shares. A company limited by guarantee is a private limited company where the liability of members is limited. A guarantee company does not have a share capital, but instead has members who are guarantors instead of shareholders. In the event of the company being wound up the members agree to pay a nominal sum which can be as little as £1. A company limited by guarantee is a useful structure for a charity where it is desirable for the Trustees to have the protection of limited liability. Also, the charity has a clear legal identity, and so can enter into contracts, such as employment contracts in its own name.

To form a Limited Company the following information is required:-

  • Suggestion of a Charity name;
  • Address of the registered office;
  • The names and addresses of the trustees (please note there must be a minimum of three);
  • The name and address of the company secretary. Although the legal requirement has gone, it is still recommended to have someone in this position.


It should be noted that the objects of the Charity need to be defined very carefully. To be a charity the purposes ('aims' or 'objects') must be all exclusively charitable. In other words, a charity cannot have some purposes which are charitable and others which are not. They are usually set out in a single clause or paragraph of the charityís governing document. If the objects clause allows the organisation to do something which the law does not recognise as charitable, or the wording used is unclear, the organisation is not considered to be a charity and could not be registered. It is best to keep these as simple as possible as you have to provide full evidence of the objectives. More information about charitable purposes is stated below.

We will also provide ongoing advisory services to the Board of Trustees to ensure that the objects of the charity are met, and that the Trustees act in accordance with their statutory obligations.

In order to register a charity with the Charity Commission the organisation must have, and carry out, wholly charitable purposes and activities. Not all purposes, even those that may be beneficial or philanthropic, are necessarily charitable. Registration as a charity will not succeed if it has some purposes which are charitable and others which are not.

Whenever an organisation exists exclusively for charitable purposes for the benefit of the public, (i.e. for the benefit of others), it is considered to be a charity. Charitable purposes are currently defined as:

  1. the prevention or relief of poverty;
  2. the advancement of education;
  3. the advancement of religion;
  4. the advancement of health or the saving of lives;
  5. the advancement of citizenship or community development;
  6. the advancement of the arts, culture, heritage or science;
  7. the advancement of amateur sport;
  8. the advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity;
  9. the advancement of environmental protection or improvement;
  10. the relief of those in need, by reason of youth, age, ill-health, disability, financial hardship or other disadvantages;
  11. the advancement of animal welfare;
  12. the promotion of the efficiency of the armed forces of the Crown or of the police, fire and rescue services or ambulance services;
  13. other purposes recognised as charitable under the existing law and any new purposes which are similar to another prescribed purpose.


All charities must operate within the constraints of charity law. They have to obey a number of rules, which include regulations covering trustees, accounts, finances and management. Company law applies as well to charities run as companies.

Charities:

  • Are set up for a charitable purpose
  • Are not profit-making Ė so any surplus they may make must be used only to further the organisationís purposes
  • Are independent Ė that is, they are not a part of any governing department, local authority or any other statutory bodies


Advantages of becoming a charity

You can obtain tax relief on:

  • Income tax (on gifts given)
  • Corporation tax
  • Stamp duty
  • VAT (in limited cases)
  • Rates
  • Capital gains tax
  • Inheritance tax
  • Many charitable trusts and foundations, as well as some businesses and corporations, will only give to registered charities.
  • The public perceives registered charities as being more credible than organisations which are not registered. This may raise the publicís confidence in your organisation, and help you attract more volunteers and benefit your fundraising.


Disadvantages of becoming a charity

  • Charity law imposes high standards of regulation and bureaucracy.
  • Trading, political and campaigning activities are restricted.
  • A charity must have exclusively charitable aims. Some organisations may carry out their aims by a range of activities, some of them charitable, some of them not. To become a charity, this type of organisation would have to stop its non-charitable activities. (The non-charitable activities can, of course, continue if carried on by a separate non-charitable organisation.) Promoters will need to consider carefully if becoming a charity will severely restrict their planned activities. If so, charitable status may not be right for your organisation.
  • Strict rules apply to trading by charities
  • Trustees are not allowed to receive financial benefits from the charity which they manage unless this is specifically authorised by the governing document of the charity or by the Charity Commission


When must you register a charitable organisation with the Charity Commission?

If your organisation has a charitable purpose and an annual income of £5,000 or more then you must apply to register as a charity with the Charity Commission. We give you all the help you need in setting up a charity.

If your organisationís income is below this threshold, the Charity Commission will not usually register you. However, organisations with an annual income not exceeding £5,000 from all sources will be able to seek voluntary registration when the part of the Charities Act 2011 that permits this comes into effect. The Charity Commission recognises that some charities may have a particular need to be registered charities, so in the meantime, they will consider requests from these charities on a case by case basis.

Please Contact Us for further information.