It is now over 5 years since the inquiry was opened, but there is reason for this lengthy period before production of the Commission’s final report – the matter involved not only an incredibly complicated tax avoidance scheme, but also a litigious trustee, and the need to seek High Court approval a key decision of the charity’s Interim Managers.
It has also been confirmed by the Commission, however, that the publication of the report has been delayed as a result of the diversion of its resources into its recent work on safeguarding.
What did the enquiry find?
The inquiry concluded that the charity’s trustee, Mountstar (PTC) Limited (“Mountstar”), was responsible for “clear mismanagement and misconduct”, and failed to fulfil its legal duties as trustee in entering the charity into the scheme and managing its participation in the scheme – in particular, to act exclusively in its best interests.
There were also serious failures to manage conflicts of interest appropriately. The inquiry found that in practice the vast majority of the decisions relating to the creation and administration of the charity and the tax avoidance scheme were made by one Mr Matthew Jenner, although efforts were made to make it seem that this was not the case by the apparent involvement of a number of different companies / partnerships, and two further trustees of the charity.
In addition, the report confirms that the charity’s claims for gift aid and gift aid transitional relief for the accounting periods ending March 2010 and 2011 totalling £46,418,202 made as part of the tax avoidance scheme were not accepted or paid out by HMRC.
Outcomes of the inquiry
The inquiry resulted in the Commission making an order to disqualify Mountstar from being a charity trustee for a period of 15 years, and further orders disqualifying the three directors of Mountstar – Mr Jenner, Mr Stones and Mr Mehigan – from acting as charity trustees or trustees for a charity for a period of 15 years.
The Commission, in its final report, also seeks to emphasise the wider regulatory good has come out of its involvement with the Cup Trust, stating it has “significantly improved and made more robust its registration and connected processes to ensure that there is now robust post-registration monitoring of charities where there are concerns or where the Commission has required certain actions at or in connection with registration”, and is now using powers that it was prompted to request as a result of its involvement with the Cup Trust.
Lessons for other charities?
The activities of the trustees involved in The Cup Trust will, it is to be hoped, not be deliberately replicated by others in the future – and given their complicated nature would seem impossible to replicate by accident!
However, other charities should note from this report the Commission’s willingness to use its relatively recently acquired power to disqualify charity trustees from charity trusteeship when appropriate.
The report also acts as a further reminder of the need for trustees to act exclusively in the best interests of their charity, and flags up both the dangers of a settlor / trustee with too much unchallenged control over the activities of a charity, and poorly managed conflicts of interest.