Wind up or dissolve the charity

Published: 20/11/2018
Updated: 20/11/2018

When it comes to winding up or dissolving a charity you can only do this with OSCR’s consent. This is to make sure that any remaining assets of the charity will be only be used for charitable purposes, as required by charity law, and that you have followed the rules in your governing document

If you are a SCIO you need to read the dissolution section in our SCIO guidance as well.


If you’re thinking about winding up or dissolving your charity you should: 

  1. assess what assets and liabilities your charity has at the time of making the application.

  2. look at what your governing document says you need to do to wind up or dissolve. Does your governing document give you the power to take this action? Does the law governing your charity’s legal form allow you to take this action? 

  3. decide what should be done with the charity’s assets remaining at the time of dissolution. Does your governing document say how any remaining charitable assets should be distributed?

  4. ask for consent to wind up or dissolve your charity before distributing the remaining assets and before taking action to wind up or dissolve.
Wind up or dissolve process

  1.     Assess your assets and liabilities

Assets means everything a charity owns; property, money, equipment, including heritable property (such as land and buildings and rights attached to it). For example, cash in the bank account, office equipment, shares or investments.

Liabilities are generally anything a charity owes. For example, bank loans, hire purchase or leases, other debts.

  1.     Governing document requirements

In most cases a charity’s governing document will say what needs to happen when the charity winds up or dissolves, including how any remaining assets must be distributed. 

Often these requirements are set out in a ‘dissolution clause’, the section in your governing document that says how the charity should be wound up or dissolved. 

One of the requirements of being a charity in Scotland is that your governing document does not allow any of the charity’s assets to be used for a purpose that is not a charitable purpose under the 2005 Act. This applies during the lifetime of the charity and when the charity is wound up or dissolved.

Many governing documents will say you must distribute any remaining assets to or for one of the following: 

  • a charity
  • charities
  • a charitable body
  • charitable purposes
  • purposes or objects the same as or objects similar to your charity. 

Similar purposes means purposes that are entirely charitable, that are similar but may not be exactly the same as your charity’s purpose(s).  

A charity, charities or charitable body means an organisation(s) in the Scottish Charity Register. Charitable purposes means the charitable purposes as set out in the 2005 Act. 

If you have an older governing document (created before 2005) then the meaning of ‘charity’, ‘charities’ or ‘charitable’ is not limited to the 2005 Act definition and includes organisations recognised before 2005 by HMRC and/or the Charity Commission for England and Wales, which could be a problem. 

We will check your application to make sure that it complies with the requirements of your governing document and charity law. 

 

  1.     Decide what to do with remaining assets

Once you have established what your governing document requires you to do, the charity needs to decide which organisation(s) any remaining assets should go to.

If you plan on giving assets to an organisation that is not a charity you will need to make sure that:

  • It is allowed by your governing document - if your governing document says you must give assets to another charity, then this is what you have to do.

  • the recipient organisation has agreed it will only use the assets for charitable purposes and in the way that your governing document allows. We may ask for evidence of this, for example, a written agreement from the recipient organisation that it will only use the assets for charitable purposes.

  1.  Apply to OSCR for consent to wind up or dissolve

Fill out the correct application form:

APPLICATION FORM: Wind up your charity 

SCIO APPLICATION FORMS:
Dissolve a solvent SCIO 
Dissolve an insolvent SCIO


Wind up/dissolution FAQs


The charity dissolves once you have OSCR’s consent and you have done what it says you need to do in your governing document and/or law governing your legal form. Having OSCR’s consent is not what makes the dissolution happen.

The date on which dissolution finally and formally takes place often depends on the legal form of the charity. Different legal forms dissolve in different ways. The most common ways are:

  • Unincorporated Association: the date that you, as charity trustees, formally agree to dissolve the body.
  • SCIOs: the date that OSCR removes the charity from the Scottish Charity Register.
  • Companies: the date the charity is dissolved by Companies House.
  • Trusts: the date that the charity's capital is expended.

When we get your application to wind up or dissolve we check whether: 

  • you have given us all the information we need to make a decision
  • you have made the application at least 42 days before the change is planned
  • your governing document and/or legal form gives you the power to do what you’re proposing
  • the remaining assets will be distributed as the constitution requires and will continue to be used for charitable purposes 

You can’t make the change until we give you our consent. We must give you a decision within 28 days of having all the information we need. There are three possible outcomes:

  1. We give our consent to the wind up or dissolution: this means you can now proceed following the rules in your governing document and/or legal form and any conditions we have set out in our decision.
  2. We refuse our consent to the wind up or dissolution: this means you cannot go ahead.
  3. We direct you not to take any action: this is to give us more time to gather further information in order to make our decision.


You can now proceed with the wind up or dissolution following the rules in your governing document and law governing your legal form. You must notify us within 3 months by sending the information we asked for when we gave consent to wind up or dissolve the charity. 

We will only remove you from the Scottish Charity Register once we receive this information. 

Consents arrows

There are three reasons: 

  1.     we do not believe you have the power to wind up or dissolve and/or
  2.     what you propose to do is not allowed by your governing document and/or
  3.     any remaining assets will not be used for only charitable purposes. 

If we refuse consent, we will explain the reasons why and how you can ask us to review our decision, if you disagree. Our review procedures set out in more detail what to expect if you request a review.

The table below lists common types of assets and liabilities and the type of information we need for a wind up application. You can use this to identify your remaining assets and liabilities. 

Download a word version of this table. 

Type of asset

Statement required

Assets held by charity

Cash at bank and in hand

All cash held in pounds sterling

 

Land and buildings

List of all land and buildings held with most recent valuation if available

 

Motor vehicles

List of all motor vehicles held with approximate market valuation

 

Furniture, fixtures and fittings

List of all furniture, fixtures and fittings (including computer equipment) with approximate market valuation

 

Shares

Name of each company in which shares are held, with number and type of shares held and most recent valuation if available

 

Investments

List of other investments held (excluding shares) with cash value or most recent valuation

 

Recoverable grants and loans due to the charity

List of all grants and loans due with their cash value

 

Tax reclaims due to the charity

Cash value of tax reclaims due (including Gift Aid)

 

Other debts due to the charity

List of any other amounts due to the charity with their cash value

 

Type of liability

Statement required

Liabilities of charity

Loans owed by the charity (including bank loans and loans to other organisations or individuals)

Most recent statement of balance in pounds sterling

 

Recoverable grants owed by the charity

List of all grants held by the charity which are to be returned to the funder with their cash value

 

Pension scheme

Most recent statement of pension liability for the charity in pounds sterling. This should be as per the last valuation of the pension scheme

 

Hire purchase or leases

Most recent statement of balance in pounds sterling

 

Tax owed by the charity

Cash value of tax owed (including PAYE, National Insurance contributions and VAT)

 

Other debts owed by the charity

List of any other debts owed with their cash value

 

 

 

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