Organisations wishing to revoke their charitable status must beware the risk of ‘asset lock’ according to new guidance produced by The Office of the Scottish Charity Regulator.

The guidance highlights the need to pass charitable assets on to a nominated charity if charitable status is revoked, advising that new regulations will soon pass allowing the Scottish regulator to match the powers of the Charity Commission in England and Wales to confiscate assets from closed charities and select another charity to receive them. 

The "Monitoring of charitable assets following removal from the Scottish Charity Register" guidance was produced to help existing charities understand the implications of removal from the Scottish Charity Register and to “help former charities understand their ongoing responsibilities”.

“Charity trustees may decide that charitable status is no longer appropriate for their organisation. However, removal from the Register is not a simple case of surrendering charitable status and moving on," said the OSCR’s chief executive Jane Ryder.

“The principle is that charitable assets must be used for charitable purposes. Where a charity winds up altogether, it must nominate another charity with similar purposes to receive the assets held at the time. Where a charity is voluntarily removed but remains active, it must continue to report to OSCR, and to apply those assets for the same charitable purposes,” she added.

Under Scottish law charities are required to report on all their charitable assets to the OSCR, even when they leave the register. In some cases, depending on the value of assets or if they are permanent or not for instance, the organisations will be required to continue submitting annual accounts.