The government expects the Charity Commission to "hunker down on its core responsibility of regulating the sector", Nick Hurd, the Minister for Civil Society, has told MPs.
Gareth Thomas, the shadow minister for civil society, asked Hurd during Cabinet Office questions in the House of Commons yesterday whether the commission had the capacity to prevent charities such as the Cup Trust from being used for "huge levels of tax avoidance".
It emerged last week that the Cup Trust received £176.5m in private donations in the two years to March 2011, but spent only £55,000 on good causes during that time. Some sector figures have labelled it a tax-avoidance scheme.
Thomas asked: "Is the minister convinced that the new head of the commission understands the seriousness of the situation, and is a cross-government plan now in place to prevent a repeat?"
William Shawcross began his term as chair of the commission on 1 October.
Hurd replied "yes" to the question and said: "Under this government, we have sent a very clear message to the Charity Commission that we expect it to hunker down on its core responsibility of regulating the sector and protecting its integrity, and, under the new chairman, we expect that to happen."
Lord Deighton, the commercial secretary to the Treasury, was also asked in the House of Lords about whether anti-avoidance measures that will be introduced in this year’s Finance Bill would stop "alleged tax-avoidance schemes, such as those operated by the Cup Trust".
Deighton said that such circular schemes did not work in tax law, as reported yesterday, and therefore no new measures were necessary.
He warned, however, that HM Revenue & Customs would "challenge and litigate enthusiastically against any scheme that it believes does not work in tax law" and it was the government’s intention to bring forward general anti-avoidance measures in the Finance Bill 2013.
Deighton reiterated Hurd’s comments that, in the light of the Cup Trust case, Shawcross should focus on the commission’s role as a regulator.
"In this particular case, as I understand it, the Charity Commission, which works closely with HMRC, investigated the trust but found that it did not have the legal basis to make a challenge," he said.
"In that context, I refer to the review of the noble Lord Hodgson, the follow-up from the government and the announcement made in the other house this morning that the focus of Mr Shawcross should be on [the commission’s] role as a regulator."