High Court winds up rate relief tax avoidance charity

10 Jul 2013 News

A charity which earlier this year lost a court case after being accused of avoiding tax by claiming business rates relief, has been ordered to wind up by the High Court.

A charity which earlier this year lost a court case after being accused of avoiding tax by claiming business rates relief, has been ordered to wind up by the High Court.

The Public Safety Charitable Trust (PSCT) had leased 1,500 premises around the UK, claiming rates relief from respective councils and receiving payments from landlords in return for the savings made. The properties were left empty aside from transmitters which were used to offer free wifi to local communities and send public safety messages to Bluetooth-enabled devices on behalf of organisations including Crimestoppers and the Cheshire Fire and Rescue Service.

The charity was taken to court by South Cambridgeshire District Council (SCDC), which acted on behalf of itself and three further councils who collectively had provided over £2.2m in rates relief to the charity. Despite arguing that the buildings were being used for charitable purposes, PSCT lost the case in May and was ordered to repay the outstanding rates. SCDC says that since the start of its court case 24 local authorities have been in touch with them regarding the charity, and it expects that these councils too will take their claims forward.

The Companies Court, part of the High Court, ruled on Monday that the charity must be wound up and an insolvency practitioner appointed to recover any assets and repay debts.

The three-year-old charity’s latest, and only, accounts submitted to the Charity Commission show, however, that its assets total £501,000 while its liabilities total £455,000 as at September 2011. An income of £1.66m was comprised almost entirely from funds received through “trading”, while it claims its £1.62m spend was almost entirely on charitable activities.

The charity had been subjected to legal challenges over its validity since its launch. It had previously won a magistrate court judgement in favour of its validity and in its September 2011 accounts the charity advised: “Therefore, based on the opinion of the trustees, directors and their legal advisers, no provision has been made for any loss of trading revenue that may occur if future rulings were to be adverse.”

Charity Commission inquiry

Following the High Court's decision in May, the Charity Commission, which was already investigating the charity, escalated its investigation to a statutory inquiry - the Commission's highest level of investigation. It said at the time:

“The purpose of the inquiry is to examine regulatory concerns including whether the charity trustees have properly discharged their trustee duties when making decisions to enter tenancy agreements and occupy those properties to further their charitable purposes, and whether any benefit to the landlord or other parties is incidental to that."

The Commission confirmed to civilsociety.co.uk that the winding-up order doesn't affect the status of its inquiry:

“The Commission’s investigation is ongoing. We continue to consider our regulatory concerns and will be working with other agencies in regards to our statutory inquiry," said a spokesperson for the regulator.

PSCT operates with two trustees: Mark Ferguson, a former headteacher; and Chrissie Sutton, a financial services consultant. 

The charity was unavailable for comment ahead of publication.

 

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