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6. SCIOs which no longer meet the charity test

Published: 13/03/2025
Updated: 13/03/2025

Like any other charity, a SCIO’s charitable status is dependent upon it continuing to meet the charity test.

However, section 30 of the 2005 Act, which relates to non-SCIO charities which no longer meet the charity test, does not apply to SCIOs. The Dissolution Regulations instead make provisions to allow OSCR to address a SCIO’s failure to meet the charity test in a controlled and orderly way, as outlined below.

6.1 OSCR’s powers of direction

If, following inquiries, it appears to OSCR that a SCIO does not meet the charity test, it must direct the SCIO:

  • Within a specified period of time, to take such steps as OSCR considers necessary for the purposes of meeting the charity test, or
  • Within a specified period of time, to make an application to OSCR for the solvent or insolvent dissolution of the SCIO (see section 7.3).

A SCIO which fails to take steps to meet the charity test as directed will then receive a further direction from OSCR to make an application for the solvent or insolvent dissolution of the SCIO.

OSCR can vary or revoke such directions. This allows OSCR to extend or shorten the timescales specified in the directions, to alter the steps it requires the SCIO to take in order to meet the charity test or to withdraw the direction if new information is received.

If a SCIO disagrees with any of these directions, it has the right to seek a review of OSCR’s decision following the same process set out in section 3.4 of this guidance. 

6.2 Powers of the Court of Session

If a SCIO fails to comply with either direction to apply to dissolve itself, OSCR must apply to the Court of Session for an order. After considering the evidence and any defence submitted by the SCIO, the Court may deal with the SCIO and its charity trustees in any way it thinks fit.

The Court may also make any order it thinks appropriate in the circumstances, including ordering the SCIO to comply with the directions by OSCR to apply to dissolve itself, or exercising any of its powers set out in the 2005 Act. These powers include:

  • Appointing a judicial factor to manage the affairs of the SCIO
  • Suspending or removing any person who is in the management or control of the SCIO
  • Restricting the financial transactions of the SCIO.
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