The Charity Commission acted disproportionately by opening a statutory inquiry and appointing an interim manager to run the tax-avoidance vehicle the Cup Trust, the charity tribunal has heard.
In his closing statement at the appeal by the Cup Trust’s corporate trustee, Mountstar PTC, against the commission’s decision to open an inquiry into the charity, Matthew Smith, a barrister from Maitland Chambers said the "lion’s share" of his argument against the regulator’s decision was whether it was proportionate.
The commission carried out a non-statutory inquiry into the Cup Trust between March 2010 and March 2012 but had concluded after legal advice that it could take no action because the trust was "legally structured as a charity". The charity spent just £55,000 on good causes of the £176.5m it raised in private donations over two years.
The commission opened a statutory inquiry into the charity in April 2013 after receiving information from HM Revenue & Customs about a fine it had issued to the charity because it had failed to respond to an information notice.
At the hearing yesterday, Smith questioned whether the commission would have opened an inquiry and appointed an interim manager at the charity if it had not been involved in a tax-avoidance scheme.
"The real issue of the case is, if this had been a charity that had a missed a deadline with a bog-standard Gift Aid claim, would we be here?" said Smith.
Smith asked the tribunal to consider whether it had been appropriate for the commission to undertake an inquiry and appoint an interim manager on the basis that the charity had not complied with an HMRC notice.
He also claimed that the real reason for the commission’s decision to appoint an interim manager was so the interim manager could obtain from HMRC the names of people who had donated money to the Cup Trust. The names could then be published, which might have caused donors to withdraw from the scheme and meant that it would fail, said Smith.
But Judge Nigel Gerald, chairing the tribunal panel overseeing the hearing, said he did not agree with all of Smith's arguments.
He said that if the interim manager, acting as the trustee, wanted to "name and shame" trustees he could have done so without requiring information from HMRC. Gerald also said that the commission had made it clear in its evidence that it did not intend to name any donors.
The case is due to conclude tomorrow.