Law firm 'regrets' advising the Cup Trust's corporate trustee

Bates Wells & Braithwaite says it commissioned an investigation into how it took on Mountstar PTC, but denies it counselled the company on tax affairs

Bates Wells & Braithwaite
Bates Wells & Braithwaite

The law firm Bates Wells & Braithwaite commissioned an independent investigation into how it ended up advising the corporate trustee of the Cup Trust.

Responding to questions from MPs on the Public Accounts Committee in Westminster this morning, Sam Younger, chief executive of the Charity Commission, said that BWB had been acting on behalf of the Cup Trust but he did not know if it had continued to do so.

In response to Younger’s comment, BWB issued a statement saying that it regretted its actions in relation to the charity, which was accused of being a tax-avoidance mechanism after it emerged that it raised £176.5m in private donations over two years but spent only £55,000 on good causes.

The statement said that BWB "did not advise the Cup Trust in relation to the creation of the charity or its tax affairs".

It said that in 2011, two years after the Cup Trust was formed, BWB was asked to advise Mountstar PTC, the charity’s corporate trustee, on its response to the Charity Commission’s investigation into the scheme.

"We responded, on Mountstar PTC’s instructions, to the Charity Commission on a small number of technical charity law questions," the statement said.

It said that BWB had not advised the Cup Trust since the commission closed its investigation, which was in March 2012.

But the statement said that the firm regretted acting on the matter and would not act in any similar case.

"We therefore commissioned Agenda Consulting – independent external management consultants with experience in the charity sector – to undertake a review of how Mountstar PTC was taken on as a client," the statement said. The consultancy produced its final report this week.

"Agenda Consulting has confirmed that there was no professional impropriety, but their report makes some recommendations to strengthen our procedures when taking on clients, and we will be acting on these," BWB said. "The recommendations include creating a formal ethics/risk group of partners to which potential new clients can be referred."

BWB said it gave no advice "in relation to tax planning", a practice that it opposed.

"Acting at all for anyone who might use charities for this purpose is contrary to our stated ethos," the firm said. "BWB does not, and will not, advise anyone on the establishment or operation of schemes involving charities where we suspect that promoting charity may not be the primary motivation.

"Throughout we acted properly and in accordance with our professional duties."

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