The Charity Commission has told the charity tribunal that information it received from HM Revenue & Customs was the "final straw" that prompted it to open its inquiry into the tax-avoidance mechanism the Cup Trust.
Mountstar PTC, the corporate trustee of the Cup Trust, has appealed to the charity tribunal against the commission’s decision to open a statutory inquiry into the charity and appoint an interim manager to run its affairs.
At the hearing at the Royal Courts of Justice in London yesterday, Matthew Smith, a barrister from Maitland Chambers representing Mountstar, said the commission opened an inquiry in April in a bid to save face after it was criticised by the Public Accounts Committee for its lack of action on the case.
But giving evidence today, Michelle Russell, head of investigations and enforcement at the commission, denied the claims.
"If the question is ‘were we motivated to do this by pressure to be seen to be doing something’, the answer is no," she said.
The commission had had concerns about the charity for some time and had discussed what actions it could take at a board meeting on 27 March, Russell told the tribunal.
The commission had 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.
But it was information that the commission received on 10 April from HMRC, that the charity had failed to respond to an information notice, that prompted the regulator to open an investigation on 12 April and subsequently appoint an interim manager.
Russell said the information from HMRC was "the last straw" that caused the inquiry to be opened.
The information prompted the commission's investigation into Mountstar and its decision to appoint an interim manager, which the regulator funded itself, something that has never happened before, Russell said.