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Lansley: Cup Trust tax avoidance should not reflect on voluntary sector

Andrew Lansley MP and leader of the house
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Lansley: Cup Trust tax avoidance should not reflect on voluntary sector3

Governance | Kirsty Weakley | 1 Feb 2013

Following yesterday’s allegation that a charity was set up as a tax-avoidance scheme, Andrew Lansley warned in Parliament against allowing the matter to reflect negatively on the voluntary sector.

A Times investigation yesterday revealed that the Cup Trust had operated in a way which enabled its investors to avoid £46m in tax by reclaiming gift aid

In Parliament the Labour and Co-op MP Barry Sheerman called for a Parliamentary debate into the voluntary sector as a whole, saying: “Does that [the report in the Times] not signify that the charitable sector is in deep trouble?”

The leader of the House, Andrew Lansley (Conservative), however would not promise to schedule the debate, saying: “There are many ways in which the government are trying to help them [charities] to succeed.

"Having read the article in the Times this morning, I would urge [Sheerman] not to try to excuse those kinds of allegations by raising the financial problems [in the charity sector]. Those are separate issues. We should not try to draw together the situation in the voluntary sector and the issue of tax avoidance."

Meanwhile the Charity Finance Group warned against a knee-jerk reaction.

Caron Bradshaw, chief executive of CFG said: “I am gravely concerned about the damage rare cases such as this can do to the reputation of the sector and to genuine philanthropists.”

She added: “It is important to reflect however that government’s anxiety on these rare cases should not lead to the vilification of genuine philanthropists or the introduction of rash measures which undermine the purpose and benefit which flow from incentives aimed at supporting charitable activity.”

Last night the Commission issued a detailed statement about its investigation into the charity, outlining the measures it took. It said it was “not comfortable with the charity’s set-up” but that independent legal advisers had said the Trust was acting within the law.

Civilsociety.co.uk has published the full statement here.

Public Accounts Committee interest

William Shawcross, chairman of the Charity Commission, could appear before the Public Accounts Committee next month to explain the regulator’s actions on the Cup Trust, The Times reported today.

Chairman of the Committee, Margaret Hodge MP, is reported  as saying that there were “questions to answer about how such flagrant abuse could occur”.

The Public Accounts Committee is currently looking into the issue of tax avoidance and yesterday heard evidence from four major accountancy firms – KPMG, Deloitte, PwC and Ernst and Young.

But a spokesman for the Committee told civilsociety.co.uk this morning that no decisions had been taken about future evidence sessions on tax avoidance. 

 

David Jennings
Private individual
Private
4 Feb 2013

The issues being reported about the Charity Commissions ‘do nothing’ approach regarding, the morality of ' charitable status and tax avoidance' alleged to have been enacted by the Cup Trust could be ‘small fry’ if the Charity Commission Regulatory functions are reviewed.

It is clear over recent years the significant decline in Statutory Enquiry cases open within the Charity Commissions Compliance Unit, combined with the number of times the Charity Commission has sought recovery of misapplied assets or funds, referred for prosecution those charity controllers who have knowingly mislead or provided statutory returns that are ‘works of fiction’ is not unsurprisingly NIL….!The NIL return may well also relate to the Charity Commissions discharge of its other statutory and regulatory powers.

The Charity Commission simply do not check what they are told if it falls outside the organisational agenda. This issues would then relate to charities that are being ran for the benefit of their controllers or used to enjoy preferential trading positions ( no corporation tax, VAT or Business Rates etc etc). The Charity Commission simply does not check what it is being sent or told…

The Charity Commission does not appear to ‘regulate’ the sector or serve it well, the Charity Commission appear to have all the trappings (and public funding) of a highly credible or properly structured organisation….however when one asks about OUTCOMES of regulatory cases in terms of quality and quantity it becomes clear the Charity Commission does not use it statutory powers to any credible degree, if at all!

John Weth
Chairman
Association for Charities
2 Feb 2013

Adrian Beney's comments on Gift Aid, the Charity Commission's actions when it decided it was 'not comfortable with the charity's set-up', and Government responsibility for the very significant decrease in the Commission's budget, focus attention on key issues relating to the Cup Trust 'scam'.

The Public Accounts Committee Chair's suggestion that William Shawcross could appear before that Committee next month to explain the regulator's actions on the Cup Trust would, if implemented, send a reassuring message that Parliament is concerned about the manner in which the sector is regulated. Even the Commission's most recent statement about its actions in relation to its concerns on the Cup Trust appears to raise further questions which need to be asked and answered before a Parliamentary Committee.

Adrian Beney
Partner
More Partnership
1 Feb 2013

It's rare that I feel moved to support something this Government has said, but Andrew Lansley's warning against an over-reaction to the Cup Trust scam is very welcome.

The case does raise all sorts of questions about the powers that the Charity Commission has, and the way in which it acts when it is, in its own words "not comfortable with the charity’s set-up".

But just because some unscrupulous people have exploited Gift Aid for their own greedy selfish purposes does not mean that the tax relief that charities and higher rate taxpayers receive is a bad thing. Indeed the whole Give it back George campaign demonstrated that much good comes of it. And research from real tax records in the Netherlands shows that a small decrease in tax relief on giving had a disproportionately larger effect on the amount people were giving.

So let's deal robustly with the scam by asking the Charity Commission to explain what it did next after it decided it was "not comfortable with the charity’s set-up". Who did officials talk to at HMRC, the Treasury and the Home Office about what could be done. Arguably this would have been a much more productive use of their time than pursuing the highly politicised public benefit agenda we've seen recently.

And we should not let government off the hook either, since it's this government that is responsible for the very significant decrease in the Commission's budget.

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