The Charity Commission’s intelligence function carried out more than 163,000 checks on new trustees in the 2012/13 financial year, over 35,000 of them in relation to new charities.

And the regulator spends around 17 per cent of its total workforce time dealing with non-compliance issues in charities, intelligence gathering and charity monitoring.

These facts are among several disclosed by the Commission in additional evidence to the Public Accounts Committee (PAC), in a bid to reassure the Committee that it is fit for purpose as the sector’s regulator.

The PAC has repeatedly questioned whether the Commission regulates the sector well enough, particularly in light of the Cup Trust debacle, where the charity was allowed to stay on the register and keep its corporate trustee despite operating an obvious gift aid scam.

The Commission’s chair William Shawcross (pictured) and chief executive Sam Younger were hauled before the PAC in March to explain their position on the Cup Trust, and were unable to provide full answers to all the questions.  In March they wrote to the Committee’s chair, Margaret Hodge MP, with these answers and now the Committee has published the corrected evidence record.

Additional Cup Trust information

In relation to the Cup Trust case, the Commission confirmed that due to the high level of expenditure by the charity, it did not have more than £139,000 at any one time to apply for charitable purposes.

On the related issue of charities with corporate trustees, the Commission’s records show that there are 6,569 charities with a corporate trustee, but not necessarily as sole trustee. Some 195 charities registered in England and Wales have one or more trustees with a private address in Jersey or Guernsey. Two have trustees with private addresses in the British Virgin Islands and 27 have a trustee in Bermuda.

The Commission also said it checked with both HMRC and the National Audit Office Mrs Hodge's assertion that MPs know of 50 such charities operating tax-avoidance schemes, but neither body recognised that figure.

It also confirmed its intention to publish a full report into its investigation into the Cup Trust which will be made available to the Committee.

Extent of compliance work

In its additional evidence, the regulator also sought to impress upon the Committee the extent of its regulatory and compliance work. It pointed out that in 2011/12 it monitored 3,485 sets of charity accounts, amounting to 4.3 per cent of the 81,000 charities with income of at least £10,000. It put controls on five charity accounts during the year.

The Commission used its powers on 188 occasions in total; appointing 11 trustees and suspended one.

In the financial year just ended, the Commission concluded 29 investigation cases, five of which were statutory inquiries.  In 17 of its remaining live investigations, the Commission is taking active steps to seek recovery of charity funds; either by supporting the police to do so, by suing trustees to recover it themselves, or by ensuring an interim manager or liquidator takes legal steps to recover the money.

In four cases it is considering bringing restitution proceedings itself.

At any one time the Commission is running between 50 and 70 investigations.

Broader strategy

But in their accompanying letter to Margaret Hodge, Shawcross and Younger said that these figures on their own “do not demonstrate the full nature of the Commission’s regulatory impact on non-compliance issues”. They sought to explain its broader strategy for dealing with non-compliance issues in charities, particularly in light of the one-third real-terms cut to the regulator’s budget.

They explained the new structure of the ‘first contact’ function, four operational teams and a dedicated investigations and enforcement team.  They outlined the Commission’s risk-based approach to ensure proportionality and reminded Mrs Hodge that trustees are, after all, volunteers.

The Commission announced earlier this week that it has now launched a statutory inquiry into the Cup Trust, which spent just £55,000 on charitable causes over two years despite having an income over the period of £176m.

Click here to read the full letter and a more detailed account of the impact of the Charity Commission's compliance work.