The Charity Commission has issued a regulatory alert highlighting significant upcoming changes that will impact larger charities. Two key developments demand immediate attention from charity leaders and finance teams.
On Thursday 4 February, the Charity Commission sent a regulatory alert to charities that could be subject to upcoming changes in the law around preventing fraud.
‘Failure to prevent fraud’ offence
Starting 1 September 2025, a new corporate criminal offence will be introduced targeting "failure to prevent fraud" for the largest charities. Specifically, charities that meet two of these three criteria will be affected:
- Charities with more than 250 employees
- Charities with an annual turnover exceeding £36 million
- Charities with total assets of over £18 million
Those meeting the above thresholds will therefore need to implement robust fraud prevention policies and procedures. The offence creates a strict liability framework, meaning charities must demonstrate they've taken all reasonable steps to mitigate fraud risks.
Companies House reforms
Alongside the fraud prevention measures, Companies House is undergoing a significant transformation. The regulatory body will transition from a passive filing repository to an active regulatory body with enhanced powers and key changes include:
- Mandatory digital filing of company accounts
- Requirement for fully tagged financial information
- Mandatory ID verification for directors and filing officers through the government gateway
- New powers to issue fines for non-compliance
Important considerations for charities
The changes come against a backdrop of growing fraud risks. A recent Fraud Advisory Panel report revealed that 42% of charities experienced fraud or attempted fraud in the previous 12 months.
While these new requirements will increase administrative complexity and potentially add costs, experts suggest viewing them as an opportunity for organisational improvement.
Next steps
There are a number of steps that larger charities should take to comply with the new regulations:
- Conduct a comprehensive audit of company information
- Familiarise themselves with new Companies House requirements
- Prepare for more rigorous compliance processes
- Review current fraud prevention policies
- Ensure accurate and up-to-date company information
- Prepare for digital filing requirements
- Verify director and officer identities
- Seek professional advice if needed
While the changes may seem somewhat daunting, they ultimately aim to create a more transparent, fraud-resistant charitable sector.
For more information on this topic, see our fraud page.
More resources
New Charity Commission fraud guidance
Understanding the risks of insider fraud
Part 1: fraud prevention is better than cure
Part 2: fraud prevention is better than cure
The importance of internal controls: a real-life example
BDO Charity Fraud Report 2024