Mountstar PTC Ltd, the single corporate trustee of the Cup Trust, has a month to expand on its appeal against the Charity Commission's decision to open a statutory inquiry into the charity, after its grounds were deemed 'too vague' by the Charity Tribunal judge.

Last month the Charity Commission appointed an interim manager to the Cup Trust and opened a statutory inquiry after the charity was exposed as a gift aid-based tax avoidance scheme. Mountstar later submitted an appeal to the Charity Tribunal, claiming that the Commission's decision to launch the inquiry is wrong.

However Judge Nicholas J Warren has called for the charity to expand on its appeal, stating:

"Having read the grounds of appeal, it seems to me it would be disproportionate to expect the Charity Commission to respond to the appeal at this stage. This is because the grounds of challenge are, at present, too vague and unspecified."

The judge advised that the regulator had already provided a three-page letter of explanation for its decision, as well as detailed statements of reason. These documents are not available to the public while the inquiry process is under way.

Jonathan Burchfield, a partner at Stone King, was appointed by the Commission as interim manager of the Cup Trust, starting from 26 April. Mountstar remains as trustee but is unable to act with the powers of a trustee while the inquiry is taking place. 

The Commission initially opened an investigation into the Cup Trust in March 2010 following concerns raised about its governance, its activities and how its funds were raised and applied. However due to current charity law, the Commission recently advised, it was unable to remove the charity from the charities register. Last month a leading charity lawyer claimed that the Commission could have removed Mountstar as the corporate trustee at the time. Moira Protani, head of the charities department at Wilsons, said  that the Commission could have taken a tougher line against the Cup Trust.

The Commission has come under fire from a number of charity sector and outside sources for its lack of action ahead of the statutory inquiry, which was launched as more information came to light in discussions with the HMRC. As a result of its handling of the Cup Trust the National Audit Office is to undertake an investigation into whether the Charity Commission is a fit regulator. 

The Cup Trust scandal caught the nation's interest when a Times investigation in January uncovered the extent of tax avoidance through the charity. The Cup Trust claims to raise funds to enable it to make grants to other UK-based charities, however despite raising over £176m in 'donations' in its first two years, it distributed just £55,000 in grants. The charity helped its donors to avoid a total of £46m in tax through gift aid incentives, the investigation claimed, although the HMRC has advised that it withheld the gift aid payments to the charity's donors.