A charity accused of being used to help a trustee avoid paying business rates has been removed from the Register of Charities by the regulator.

The Charity Commission opened an investigation into the Melton Arts and Crafts Trust, a Norfolk-based organisation, after receiving complaints from North Norfolk District Council that it was being used to avoid paying rates on industrial units.

Landlords who own empty properties are required to pay the business rates on those properties. However charities receive an 80 per cent mandatory rates relief. As a result, some charities have entered into agreements with landlords to take over the lease of the property and claim rates relief, sometimes in exchange for a payment.

The Commission is already investigating or has investigated several other charities for this, including the Public Safety Charitable Trust, Life Foundation Trust, the Augustine Housing Trust, the Africa Relief Trust, and the Kenya Aid Programme.

Melton Arts and Crafts Trust was originally set up to run events at Melton Hall in Norfolk (pictured), but stopped operating in the late 1990s.

The Commission reported that after a long dormant period, the charity recently agreed a deal with a company run by its founding trustee, to buy donated goods and store them in business units owned by that company.

The charity explained that it had received donated goods that had to be moved to a new location, and which it planned to sell to raise money. As a result it entered into a lease for several units in Tattersall Business Park, owned by its trustee’s company, at a nominal rate.

“The Commission found no evidence of charitable activity,” the Commission report said. “There are questions about whether the leases are valid and whether the transfer of property was accepted in a conflict of interests. However, even if the Trust does have title to the goods and has title to the leases, the Trust does not operate as a charity.

“We decided that the charity should be removed from the Register of Charities on the grounds that it does not operate.”