The Charity Commission has opened a statutory inquiry into the Augustine Housing Trust, a storage charity, over its occupation of commercial premises, which the Commission says may result in it becoming liable for business rates.

The charity has appealed the decision to the Charity Tribunal.

Charities receive 80 per cent mandatory relief on business rates on any property they occupy. Some commercial landlords with empty property, who are liable for the rates on those buildings, have approached charities and offered them donations to take on leases, as part of a scheme to avoid that tax.

The Commission says the Trust is the fourth charity it has investigated for taking on the leases of commercial property. The Public Safety Charitable Trust has been ordered to wind up after the High Court found it was liable to pay business rates; the Africa Relief Trust is being investigated for allegedly holding rented properties ‘on standby’, while claiming the 80 per cent business rates relief available to charities; and Kenya Aid Programme is in a long-running battle with Sheffield City Council over property rate relief on two warehouses it leases in the city.

Kevin Gregory, a trustee of Augustine Housing Trust, told Civil Society News he disputed any wrongdoing. He said the charity will take legal action against the Commission, including appealing to the Charity Tribunal and Attorney General. He said the regulator has not followed due process.

He also accused the regulator of defamation.

The Augustine Housing Trust is also under investigation by the Charity Commission for not filing required financial information with the regulator on time. Its most recent documents filed with the Charity Commission show it had an income of £22,942 in 2011/12, but spent just £10. It is a year overdue in filing financial information for 2012/13.

Gregory accused the Charity Commission of altering its information on the Charity Commission website.

“Our accounts have been filed properly since 2004, we’ve always sent the same figures, but not in the form they want,” he said. “It’s nonsense. Our accounts and returns have been in order and the Charity Commission has gone in and altered them.”

Gregory is also a trustee of Legal Action, which the Commission said it is "engaging with" on "a number of regulatory issues".

Legal Action recently sought to appeal to the Charity Tribunal over its engagement with the Commission but was told it had "no valid appeal".

Extra reporting by David Ainsworth