Financial regulator opens inquiry into Cup Trust associates

10 Dec 2013 News

The Financial Reporting Council is the latest regulatory body to take an interest in the operations of the Cup Trust, launching an investigation into whether any accountancy firms or individuals have committed misconduct in relation to its set-up and operation.

The Financial Reporting Council is the latest regulatory body to take an interest in the operations of the Cup Trust, launching an investigation into whether any accountancy firms or individuals have committed misconduct in relation to its set-up and operation.

The scope of the FRC’s investigation covers any firm or agency that is a member of one of the professional accountancy institutes:  ICAEW, ACCA, ICAS, CIMA or ICAI in Ireland.  This includes chartered accountants, auditors and tax planners.

A spokeswoman for the FRC said the investigation was likely to take around a year and would conclude with either no action being taken, or a decision to bring disciplinary proceedings against an individual member or member firm.

If the disciplinary proceedings are challenged, this may advance to a disciplinary tribunal and if the panel finds against the member, sanctions from the FRC range from a severe reprimand to an unlimited fine, depending upon the extent of the misconduct.

The spokeswoman admitted that questions had been asked about why the FRC took so long to launch its investigation, given that the Charity Commission is several months in to its own statutory inquiry and the Public Accounts Committee and National Audit Office have publicly condemned the Cup Trust. 

But she said the FRC needed time to gather the necessary evidence to justify a formal investigation – “because when we investigate that can have an adverse effect on a firm’s reputation”.

However, she refused to name the individuals or organisations that are under investigation - this is not divulged before the end of the inquiry.

The Cup Trust was established as a tax-avoidance vehicle in 2009, and even though income totalling £176m has passed through it since its inception, just £55,000 has been passed to good causes.  Yet its ‘donors’ have claimed hundreds of millions of pounds in gift aid tax relief and the charity itself has submitted claims totalling £46m – however HMRC has so far refused to pay these and does not expect to do so.

The independent auditor that signed off the Cup Trust’s accounts in 2011 and 2012 was Hillier Hopkins, based in Watford, north London.  According to its website it is registered with ICAEW.

Matthew Jenner, Darren Stones and Anthony Mehigan were the directors of the Cup Trust's sole corporate trustee, Mountstar PTC.  Jenner and Mehigan also ran NT Advisors and were involved in other tax-planning agencies associated with the Cup Trust. It is not known whether any of these were members of any of the FRC-registered professional bodies.

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