A registered charity may be removed from the Charities Register (deregistered) under the Charities Act 2005, either by request or on a decision by Charities Services.
The following information addresses the deregistration process and what happens after deregistration.
When and why would a charity want to be deregistered?
A charity may ask to be deregistered at any time and for any reason. For example, a charity may request deregistration if it is winding-up and will cease to exist.
How should a charity ask to be deregistered?
An officer of the charity, or an authorised person, will need to complete a deregistration form.
You can find this form by logging on to your account (external link) , and clicking on the “Deregister” tab on your charity’s dashboard.
The form has been developed following recent changes to tax legislation that mean a deregistered charity may need to pay a one-off tax on the accumulated assets that are held as at the date of deregistration. Further details about this can be found below.
The form captures information about the reasons for deregistration, the value of the charity’s assets and liabilities at the time of deregistration, and what the charity has done (or intends to do) with any accumulated assets and income. A summary of this information will appear on the charities register, and will be available to Inland Revenue.
Tax consequences of deregistration
Liable for income tax
Registered charities are eligible for charitable tax status. However, when a charity is deregistered it will become liable for income tax. This applies unless the charity qualifies for another tax exemption. For example, if a sports club is deregistered, they might instead qualify for a tax exemption as an amateur sports body.
Tax on accumulated assets
Recent changes to tax legislation means that a deregistered charity may also need to pay a one-off tax on the accumulated assets that are held as at the date of deregistration. A deregistered charity has twelve months to distribute those assets to another registered charity or give assets to charitable purposes. Assets which have not been distributed within twelve months of deregistration will be taxed.
Alternatively, if the charity re-applies and is again registered as a charity within twelve months of deregistration, they will not be taxed on their accumulated assets.
Donee tax status
A deregistered charity may also lose their eligibility to provide receipts for donees to claim tax rebates.
Talk to Inland Revenue
Charities Services advises Inland Revenue when charities are deregistered. We strongly advise that you contact Inland Revenue to discuss your tax situation if your charity is considering deregistration and holds assets.
Can Charities Services choose to deregister a charity?
Yes. Charities Services has the authority to deregister a charity that:
- no longer meets the requirements for registration;
- has acted in a way that is considered to be "serious wrongdoing"; or
- has "significantly and persistently" failed to comply with the Act.
However, deregistration will not happen without the charity being given the chance to have its say on the matter. The charity and any officer of the charity can object on either or both of the following grounds:
- that the grounds for deregistration have not been satisfied; or
- that, for any other reason, it would not be in the public interest to remove the entity from the Charities Register.
If Charities Services receives an objection from a charity that it is considering deregistering, it must not deregister it unless it is satisfied that:
- it is in the public interest to do so; and
- there are grounds to deregister the charity, or that the facts of the objection are not correct, or that the objection has been withdrawn or is trivial in nature.
Can we object to our organisation being deregistered?
If your charity receives a notice saying that Charities Services intends to remove it from the Register, you have the right to object – but it is important that you do so within the timeframe stated in the notice. If Charities Services doesn't hear from a charity within the stated timeframe, we will begin steps to formally deregister the charity. Contact Charities Services as soon as you can even if it is to confirm that you have received the notice and will be making an objection.
If Charities Services proceeds to deregister the charity, it will advise the charity in writing, and give reasons for the decision.
What will be shown on the Register after a charity has been deregistered?
The following details will be shown on the Charities Register after a charity has been deregistered:
- the legal name the charity was registered under;
- its registration number;
- the grounds for the deregistration; and
- the effective date of deregistration.
Understanding the published grounds for deregistration
Below are plain-language explanations of the published grounds that appear on the Charities Register after a charity has been deregistered:
- This entity was removed from the Charities Register by Charities Services under section 31 of the Charities Act 2005 with effect from [date]- Charities Services removed them from the register after going through the full deregistration process and deciding they no longer qualified to be registered.
- This entity was removed from the Charities Register at their request under section 32 (1)(f) of the Charities Act 2005 with effect from [date]– the charity wrote and asked Charities Services to remove them.
- This entity was removed from the Charities Register at its request under section 31 of the Charities Act 2005 with effect from [date] - when Charities Services began compliance action the charity asked to be removed rather than make a submission.
- Failed to file Annual Returns as required by section 42 of the Charities Act - Charities Services removed the charity because they did not file their annual returns despite follow up by Charities Services.
Will a deregistered charity still be eligible for tax exemptions?
Only those charities currently on the Charities Register are eligible for charitable tax status. We advise Inland Revenue when we remove charities from the Register.
Deregistered organisations should contact Inland Revenue to discuss their tax liabilities.
What changes for charities after deregistration?
A deregistered charity must no longer:
- call itself (or imply that it is) a "registered charitable entity";
- display or promote its former Charities registration number; or
- claim eligibility for charitable tax exemptions.
If the charity is an incorporated society, it must go back to filing returns with the Companies Office.
Some funding may not be available as some funders have policies that mean they only support charities that are on our Register.
What happens if a charity wants to go back on the Charities Register?
In all cases where a charity wishes to go back on the Charities Register after it has been deregistered, it will need to follow the application process in full. This means that, it will need to complete an application form, certify each of its officers and provide a copy of its rules and any other documents as required.
However, section 31(4) of the Act says that Charities Services may order that:
- a particular charity cannot apply again until after a certain date
- a particular officer cannot be an officer of a charitable entity for up to five years.
Before Charities Services makes one of these orders, however, it must notify the charity that it is intending to do so and give the charity a reasonable time to make submissions on the matter.