Administrative penalties for NPOs

Tuesday 17 August 2010

In 2008, the States introduced legislation (the Charities and Non Profit Organisations (Registration) (Guernsey) Law, 2008) (“the Registration Law”) requiring most charities and other non profit organisations (“NPOs”) to apply to be placed on a Register to be maintained by the Director of Income Tax. However, this was completely separate from his duties under the Income Tax (Guernsey) Law, 1975, and to make this clear he now administers the Registration Law under the title of “Registrar of NPOs”.

The Registration Law required NPOs to register if they were based in Guernsey, Herm or Jethou, and had assets or funds of, or over, £10,000, or gross annual income of, or over, £5,000. There is an exemption for NPOs which are administered by a person licensed by the Guernsey Financial Services Commission (known as “manumitted organisations”) and those NPOs which were not required to register (either because they were below the financial limits, were based in Alderney or Sark, or were manumitted organisations) were able to do so voluntarily if they wished. However, compulsory registration is now in the process of being extended to Sark (under its own legislation) and Alderney (by extending the Registration Law to cover NPOs based in that island).

The Registration Law was publicised at the time and more than 400 charities and NPOs are now registered. As with most legislation, there were sanctions for non-compliance with the obligations imposed, and initially the only such sanction available to the Registrar was to seek a criminal prosecution, with a resulting substantial fine following conviction.

It was felt, however, that this approach was perhaps somewhat excessive, given the fact that most NPOs are run by individuals who voluntarily give up their free time for worthy causes, and in the light of the relatively few number of NPOs who have failed to comply. Nonetheless, the Registrar does need to have some facilities available to him to enforce compliance where appropriate.

As a result, at their July meeting, the States approved an Ordinance, granting the Registrar powers to impose an administrative penalty for the failures.

When the Registration Law was introduced originally, the Registrar made it clear that whilst carrying out his duties to enforce compliance with the Registration Law, he will operate it in a proportionate and reasonable manner. Penalties will, however, be imposed where appropriate and NPOs should ensure that they comply with their obligations under the Registration Law. The criminal sanctions referred to above will remain available to the Registrar in appropriate cases.

NPOs requiring more information are invited to visit the website for more information.