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This is a summary of the key points to be borne in mind when planning for closure. At the bottom of the page you will also find a list of external links giving helpful advice.

Attention to detail

It can be easy to be caught out by unexpected costs – e.g. invoices for contracts that should have been cancelled, penalty clauses when cancelling maintenance agreements, insurance etc. It’s a good idea to look back through all invoices and check dates and terms. At least a year before closure start making a list of annual subscriptions/agreements as they come in and decide how you’ll deal with them (cancel immediately, renew, but for a restricted time, etc.). There’s really no substitute for keeping on top of the detail, although it can be quite time-consuming.

Compromise agreements

You might want to consider drawing up formal compromise agreements between the organisation and all staff and Trustees regarding final payments and any conditions attached. There is general information on them here:
http://www.hmrc.gov.uk/manuals/eimanual/EIM12855.htm
http://www.compromiseagreements.co.uk/

Even if people seem supportive of the decision to wind up an organisation, things may look different as closure approaches, or afterwards, especially if they’re persuaded by others with a vested interest in making money from the situation or just causing trouble. People don’t always behave predictably, so it’s worth having a serious look at these agreements.

Assets

Your former funders may want to have a say in what happens to your assets on closing down. Will any assets still have a book value at that time? Even if not, they will be listed in your Register of Assets, so you need to document what happens to them. It would be wise to see what your governing document says about disposal of assets and check with your former funders whether they have any stipulations.

Other organisations may be reluctant to take things that are a bit past their prime, so you can’t assume that things will be welcomed with open arms and you may need to budget for disposal. This may be particularly true of PCs if you plan to give them away – at the very least they’ll need to have their hard disks wiped in an approved manner (for data protection) and everything needs to be signed off properly. If you’re scrapping them it’s not such a problem as physical destruction should be adequate, but make sure you document this.

In general it’s important to leave a clear audit trail of what you’ve done with your assets, so take care to document everything clearly.

Paperwork

Key financial and personnel documents will need to be kept for 7 years for audit purposes. You’ll need to draw up a list of what to keep and think about who will do this and whether they’ll need paying. It would be worth asking your former funders or your accountants whether they’d be prepared to do this. Any sensitive paperwork not being kept will need to be properly destroyed – there are firms that will do this and provide a certificate of destruction.

Communication after closure

Someone will need to continue to be the contact person after closure. It might be possible for some enquiries to be handled by whoever takes on your paperwork, but it’s advisable to have a dedicated person who knows the organisation dealing with matters on a part-time basis for at least three months after the official closure date. This could be a Trustee or a former employee. This can be an important part of assuring your legacy, both practically and from a PR point of view, so that you don’t just leave a void that can be filled with all manner of gossip and rumours once the organisation no longer exists.

Legacy

How will you ensure the work of your organisation is not forgotten? Your website could become a digital archive of your achievements, but you'll need to set aside a small budget to have someone at least handle domain name and hosting renewals. Do you want to set up a physical archive of your work? If so, you'll need to identify a suitable body to host this, for how long, and what it would cost.

VAT

If your charity is VAT registered, don't forget to de-register. It can pay to time your de-registration carefully because you can't claim for VAT on any goods you buy after your registration is cancelled. But you can still claim relief for VAT on services supplied to you after your registration was cancelled, as long as these relate to your normal business activities and you do this within three years of the date of invoice. So, for example, you can still re-claim the VAT on the final invoice from your accountant for preparing your closure accounts. Or you can ask HMRC to delay cancelling your de-registration for up to six months. There's more information on HMRC's website:
http://www.hmrc.gov.uk/vat/managing/change/cancel-reclaim.htm

Bodies to inform

You should inform the Charity Commission, Companies House (if you’re registered with them) and HMRC at the very least. It’s worth using all the professional bodies you can for free advice and possible help, so set up meetings with your accountants, auditors and former funders to discuss your plans.

And finally...

Closing down an organisation has certain things in common with undertaking a DIY project: even with the best-laid plans it will take longer, be more complicated and more expensive than you thought. And no matter how well-prepared you are, the unexpected will happen, so flexibility is crucial.



Useful Links

Charity Commission information on how to close or merge a charity:
http://www.charity-commission.gov.uk/Manage_your_charity/Merge_or_close_index.aspx

Charity Commission guidance on dissolution and removal from the register of charities, for charities with annual income under £5 million:
http://www.charity-commission.gov.uk/library/guidance/csd1077a.pdf

Charity Commission guidance on dissolving a small charity, for charities with annual income under £20,000 and assets under £200,000:
http://www.charity-commission.gov.uk/library/guidance/csd1344a.pdf

Charity Commission guidance on managing financial difficulties and insolvency in charities:
http://www.charity-commission.gov.uk/Publications/cc12.aspx

Newcastle CVS Information Sheet – Scroll down to the "Closing down" section for information on closing a registered charity, a charitable company and a voluntary or community organisation:
http://www.cvsnewcastle.org.uk/supporting-a-developing/information-sheets



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