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Trustees of charity involved in business rates dispute disqualified

24 Apr 2020 News

Two trustees of Public Safety Charitable Trust (PSCT) mismanaged the organisation, the Charity Commission has concluded.  

One trustee was disqualified for a period of nine years starting on 25 May 2017 and another was disqualified for a period of five years, starting on 15 July 2015. They were disqualified as company directors, meaning they also cannot hold charity trusteeships for the same period. 

Yesterday the Commission published the findings of its statutory inquiry

PSCT had previously lost a court case making it liable for approximately £17m in business rates and the Official Receiver was appointed to wind-up the charity.

Its operational model was to broadcast public service messages to the local community via Bluetooth equipment, which would be situated close to shopping centres. The charity took out leases on empty properties and placed the Bluetooth equipment in these properties.

The charity stated this equipment broadcast public service messages to passersby. It then claimed the 80% mandatory charity relief on the business rates levied on the properties, and in most cases the further 20% discretionary relief. 

The Commission opened a regulatory compliance case in October 2011 after concerns regarding business rates relief claimed by the charity were raised by several local authorities. Further concerns arose as a result of a court judgment on 14 May 2013. 

The charity was subject to ongoing legal challenges with local authorities regarding claims for business rates relief. During 2012, the charity was taken to court by three local authorities. One magistrates court ruled in favour of the charity, whilst the other two ruled in favour of the local authorities.

The charity was liable for the business rates on the premises it had leased, and following the 2013 judgment was liable for approximately £17m of business rates.

The Commission opened a statutory inquiry on 21 May 2013.

Compulsory liquidation petition

The report states: "A compulsory liquidation petition was issued by the Insolvency Service on 23 May 2013 and the winding up of the charity began on 8 July 2013 with the Official Receiver being appointed as liquidator of the company. They were also tasked with investigating the conduct of the directors and trustees.”

One trustee was disqualified for a period of 9 years starting on 25 May 2017 and another was disqualified for a period of five years, starting on 15 July 2015.

Both are also disqualified from being charity trustees or holding any positions that have senior management functions within a charity for the same period.

The charity is due to be dissolved once the liquidator has completed the final report, and it will then be removed from the register of charities.

'Did not have control over the charity’s records'

The inquiry found that “there was evidence that the trustees did not have control over the charity’s records”.

The report states that during a meeting with the trustees on 23 November 2012 they were asked about having access to the charity’s records and "gave vague answers which suggested that they did not have regular access to the charity’s records, and they did not keep minutes of all trustee meetings held. This is evidence of the trustees’ failure to comply adequately with their legal duties and responsibilities”.

The inquiry concludes: "The trustees made decisions which exposed the charity to risk of liability for business rates. They continued to lease properties, despite ongoing legal challenges to the operating model they had adopted which further exposed the charity to risk and the charity did not have the resources to meet these liabilities. The trustees also failed to maintain adequate control of charity records."

Amy Spiller, head of the investigations team at the Commission, said: "Being a charity is meaningful - we expect trustees to be accountable and demonstrate their worth to the public and donors. The trustees of Public Safety Charitable Trust could not show this, instead they undermined the meaning of charity by enabling businesses to avoid paying business rates, resulting in the charity taking on huge liabilities they could not afford and consequently costing the charity’s future. It’s right that trustees have been disqualified and the charity will be removed from the register." 

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