Due to immense media attention, HMRC’s constant desire to collect taxes rather than allow Charitable Relief and the pressure on government to prosecute Tax-Evasion; the Charity Commission has ramped up its efforts to investigate charities and prosecute Trustees.
A charity exists wholly for charitable purposes and for the benefit of the public. Dealing with poverty, promoting education, religion, arts, culture and science are examples of acceptable charitable purposes.
Charities are set up as not-for-profit entities and are granted relief from income tax, corporation tax and capital taxes in addition to many other forms of taxable relief. Moreover, those paying into the charity can claim ‘gift-aid’ which is a supplementary income for most charities.
Due to Charity Law demanding a very high standard of regulation and compliance with the Charities Act 2011, the level of Charity Fraud prosecutions has been on the continued increase. As people work harder to protect money from the HMRC and use ‘charity vehicles’ to benefit from more disposable income, the Charity Commission has zoomed in on every complaint and pursued it with vigour.
Charity Fraud comes with too many faces. If the charity is undertaking non-charitable activities, is funding political campaigns, is trading goods or services, is not documenting its affairs and squandering money for Trustees’ personal or social purposes, a Charity Fraud prosecution is highly likely. A recent spate of prosecutions has focused entirely on 'gift-aid' claims made by charities and lack of retention of the payees' identification and employment details has led to substantial difficulties for very high-profile charities.
Trustees are particularly vulnerable and open to prosecution due to the immense responsibilities placed on them. If the Trustees receive financial benefits from the charity without authority from the deed setting up the charity, this is a Criminal Offence for example.
The Charity Commission, once involved, will employ financial experts to scrutinise the charities conduct, operations, expenditure and accounts with a fine tooth-comb and pursue any irregularity with compliance using the Fraud Act 2006. Fraud by False Representation, Fraud by Failing to Disclose Information, Making or Supplying Articles for use in Fraud or on the larger end of the spectrum, Conspiracy to Defraud and Money Laundering are the most preferred charges put against Trustees.
The duty to keep accurate records and to ensure every penny is spent in line with the Charities Deed is particularly important. Trustees often get caught up in Charity Fraud allegations when charity money has been deposited into their personal accounts, into accounts of family members, not accounted for at all, spent on personal expenses such as holidays or watches and even when more charity funds have been withdrawn than permitted by the charity deed.
Due to the number of people involved in the operations of a charity, the Charity Commission will seek to interview everyone and collect evidence against the Trustees. They will seize records, computers, digital devices and interrogate the execution of operations for charitable purposes to identify malpractice.
Our Fraud Solicitors are especially trained to defend Charity Fraud cases. We are not only knowledgeable and experienced with the Fraud Act 2006 but also with the Proceeds of Crime Act 2002 which will present Money Laundering, Restraint Order and then Confiscation issues.
Early action in any case is pivotal to increasing the chances of success. In such complex and intimidating investigations or prosecutions, you will require skilful advice at every juncture. Please Contact Us and ask to speak to our Fraud Solicitors to arrange a meeting, whether face to face, online or by telephone. If you prefer, you can WhatsApp us from the link you will find at the bottom banner if you open this page on your mobile phone device.