Timid Charity Commission board not up to the job

The Charity Commission who cost taxpayers £26 million, employ over 370 people, including specialists in charity law, and yet allow a tiny charity to run a massive tax scam.

The charity concerned is The Cup Trust. The alleged tax scam works by enabling donors to claim Gift Aid tax relief, and in two years has enabled donors to dodge £46 million in tax. The £176 million of donors money was used by The Cup Trust to buy government bonds.  Donors then bought these off the Trust for a very small sum. They then sold the bonds at market value and gave the proceeds to the Cup Trust.  The donor then claimed tax relief through Gift Aid. HMRC explain Gift Aid HERE, and give this example for the higher rate taxpayer.

If you pay higher rate tax, you can claim the difference between the higher rate of tax 40 and/or 50 per cent and the basic rate of tax 20 per cent on the total ‘gross’ value of your donation to the charity or CASC.

For example, if you donate £100, the total value of your donation to the charity is £125 – so you can claim back:

  • £25 – if you pay tax at 40 per cent (£125 × 20%)
  • £37.50 – if you pay tax at 50 per cent (£125 × 20%) plus (£125 × 10%)

Now that The Times has exposed the tax dodge, I imagine the authorities will now try harder to close the tax loophole that they’ve signally failed to do so far. Go HERE to see The Cup Trust entry on the Charity Commission website.

Following The Times expose, the Charity Commission issued a statement, which said,

We are not comfortable with the charity’s set up. … We opened an investigation into the charity in March 2010 following concerns raised about its governance, its activities and how its funds were raised and applied.

We seriously considered whether or not it was a charity and whether it should be removed from the register. But whatever the motives for creating the Cup Trust, we were forced to conclude that we could not remove it,  as the Cup Trust is legally structured as a charity. … For that reason, despite our concerns, we closed our investigation in March 2012, with regulatory advice and guidance, knowing that we might intervene again.

The Charity Commission appear to want to blame HMRC. Typical buck passing. If they are incapable of seeing through an obvious dodgy operation, what purpose do they provide. Time to remove this timid Board and its managers, for ones with some grit and determination to see off scams, and not hide behind legal advice.

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