Appointing interim manager for Cup Trust 'was appropriate action', says regulator

Charity Commission barrister Ben Jaffey tells the charity tribunal there was evidence of mismanagement and misconduct because of conflicts of interest

Ben Jaffey
Ben Jaffey

The Charity Commission has told the charity tribunal that it was appropriate for the commission to open a statutory inquiry into the Cup Trust and appoint an interim manager to run the tax-avoidance vehicle.

Mountstar PTC, the corporate trustee of the Cup Trust, has appealed to the tribunal against the commission’s actions.

In his closing statement at the hearing in the Royal Courts of Justice in London on Wednesday, Matthew Smith, a barrister from Maitland Chambers, said the regulator had acted disproportionately by appointing an interim manager.

But barrister Ben Jaffey of Blackstone Chambers, acting on behalf of the commission, said in his closing statement on Friday that it the regulator's actions were appropriate.

Jaffey said there was evidence of mismanagement and misconduct because of conflicts of interest within the charity.

Matthew Jenner, a director of Mountstar, was also co-running a tax advisory partnership, which advised taxpayers involved in the Cup Trust tax-avoidance scheme, said Jaffey.

Jaffey argued that Jenner’s loyalties were divided between clients of his company, who made payments into the Cup Trust scheme, and the Cup Trust itself, through his role as director of Mountstar.

"He had divided loyalties and that’s why his position was untenable. It’s a classic conflict of interest," said Jaffey.

The court heard that the Cup Trust made £155,000 from the scheme, because every taxpayer who put money through the scheme, £176m in total, gave 0.1 per cent of their contribution to the charity.

But Jenner’s company charged the donors 0.4 per cent of their contribution and in total made about £685,000 in fees, said Jaffey.

The commission also had grounds to appoint an interim manager because the charity had been issued a penalty by HM Revenue & Customs for failing to respond to an information notice, said Jaffey.

He said that the discovery of five blank cheques, signed by two directors of Mountstar and discovered by the interim manager, also demonstrated that the appointment was proportionate.

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