I have a question concerning a small charitable pre-school (unincorporated) who have run into difficulties. They have a new board of trustees replacing the last one which was found to be involved in a series of 'incidents' of mismanagement of funds e.g. the current board have to pay out £300 per quarter for a photocopier that they do not have (and cannot find) and are liable to the lease company for the whole cost of the machine - £3000. The manager of the setting left because had been taking money from the group and HMRC are demanding payment for unpaid tax of £8000. This is just a sample of their current difficulties. Their current level of debt is around £20k.

Their local CVS has come in to bail them out and they have come to an agreement to pay back £10 per month which is all they can afford at the moment.

They would like to know about becoming an incorporated charity . The new board are keen to turn this group around and put in place all the necessary processes to ensure that the above doesn’t happen again. In view of their current liabilities would they be able to incorporate as a CLG - they understand that they may have to take on the liabilities of the previous board but am not sure how this would be viewed by either Charity Commission or Companies House?