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Charity Commission investigates Cup Trust tax avoidance scheme Charity Commission investigates Cup Trust tax avoidance scheme
(5 months later)
The Charity Commission has launched a major investigation into one of the biggest charity tax avoidance schemes in recent history.The Charity Commission has launched a major investigation into one of the biggest charity tax avoidance schemes in recent history.
The Cup Trust, which raised £173m while only giving £55,000 to good causes as part of a suspected abuse of gift aid tax breaks, has been placed under the control of an interim manager by the Charity Commission.The Cup Trust, which raised £173m while only giving £55,000 to good causes as part of a suspected abuse of gift aid tax breaks, has been placed under the control of an interim manager by the Charity Commission.
Fresh evidence unearthed by HM Revenue and Customs triggered a statutory inquiry by the regulator.Fresh evidence unearthed by HM Revenue and Customs triggered a statutory inquiry by the regulator.
It is thought the Cup Trust claimed £46m in gift aid on behalf of wealthy clients. It was partly controlled by Matthew Jenner who also ran other tax avoidance schemes, including one used by the comedian Jimmy Carr.It is thought the Cup Trust claimed £46m in gift aid on behalf of wealthy clients. It was partly controlled by Matthew Jenner who also ran other tax avoidance schemes, including one used by the comedian Jimmy Carr.
The decision to investigate comes three months after the Cup Trust scheme was first exposed and after the Charity Commission's chairman, William Shawcross, told the House of Commons public accounts committee that the scheme had been "a disaster for the charity sector".The decision to investigate comes three months after the Cup Trust scheme was first exposed and after the Charity Commission's chairman, William Shawcross, told the House of Commons public accounts committee that the scheme had been "a disaster for the charity sector".
"They are shutting the stable door after the horse has bolted," said Margaret Hodge, the chairwoman of the PAC. "How bad do you have to be to be kicked out by the Charity Commission and why did they have to wait until after our hearing."They are shutting the stable door after the horse has bolted," said Margaret Hodge, the chairwoman of the PAC. "How bad do you have to be to be kicked out by the Charity Commission and why did they have to wait until after our hearing.
"We welcome the investigation but our real concern is why the Charity Commission didn't spot it at the time of registration or after. Anybody doing the slightest bit of monitoring should have spotted it.""We welcome the investigation but our real concern is why the Charity Commission didn't spot it at the time of registration or after. Anybody doing the slightest bit of monitoring should have spotted it."
The Charity Commission said the case did not meet the criteria for a statutory inquiry until the new information from the tax authorities triggered it.The Charity Commission said the case did not meet the criteria for a statutory inquiry until the new information from the tax authorities triggered it.
The Cup Trust is accused of exploiting rules on gift aid which allow charities to claim tax relief on donations. Higher rate tax payers can also reduce their tax bill on charitable giving to 20%. It is understood the Cup Trust bought government bonds and sold them for a minimal sum via third parties to investors, who then sold them at market value and "donated" the proceeds to the Cup Trust.The Cup Trust is accused of exploiting rules on gift aid which allow charities to claim tax relief on donations. Higher rate tax payers can also reduce their tax bill on charitable giving to 20%. It is understood the Cup Trust bought government bonds and sold them for a minimal sum via third parties to investors, who then sold them at market value and "donated" the proceeds to the Cup Trust.
Jonathan Burchfield, a partner at Stone King LLP has been appointed as interim manager of the charity, a move being challenged by the corporate trustee, Mountstar PTC.Jonathan Burchfield, a partner at Stone King LLP has been appointed as interim manager of the charity, a move being challenged by the corporate trustee, Mountstar PTC.
"We have had ongoing concerns about the charity's involvement in the gift aid scheme and the potential for damage to public trust and confidence," said Michelle Russell, head of investigations and enforcement at the Charity Commission."We have had ongoing concerns about the charity's involvement in the gift aid scheme and the potential for damage to public trust and confidence," said Michelle Russell, head of investigations and enforcement at the Charity Commission.
"While we took no regulatory action pending HMRC's determination of the charity's gift aid claims, we have continued to look at the trustee's handling of its responsibilities and duties. We always made it clear that if new information came to light we might open a further investigation.""While we took no regulatory action pending HMRC's determination of the charity's gift aid claims, we have continued to look at the trustee's handling of its responsibilities and duties. We always made it clear that if new information came to light we might open a further investigation."
The inquiry will examine the charity's gift aid claims, the management of conflicts of interest, the governance of the charity by its trustee and its involvement in the gift aid scheme and whether or not the trustee has complied with its obligations.The inquiry will examine the charity's gift aid claims, the management of conflicts of interest, the governance of the charity by its trustee and its involvement in the gift aid scheme and whether or not the trustee has complied with its obligations.
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