The environmental charity Healthy Planet has defended its practice of occupying empty shops in exchange for a charitable donation, which saves on business rates for the owners.
An article in the Financial Times highlighted the practice, which has seen the organisation’s annual income jump from £13,000 to £1.14m in a year. It quoted experts who said the move was "pushing this into the area of a scam".
Since 2008, landlords who own empty property must still pay business rates on that property, but charities get mandatory 80 per cent rate relief.
On its website, Healthy Planet offers to occupy properties and claim rate relief, in exchange for "a tax-deductible, charitable donation to support Healthy Planet's work" and a requirement for the landlord to display promotional posters advertising the charity’s activities.
John Brookes, marketing and communications manager at Healthy Planet, told Third Sector that the charity was legitimate in its dealings.
"I categorically refute that this is a scam," he said. "We’ve always been open and honest about our activities.
"We’re a charity that’s found a new way of raising money to support grant initiatives," he said.
According to its most recent accounts, covering the year to 26 June 2010, 99.5 per cent of its £1.14m income came from the practice. Healthy Planet occupied 85 shops, the accounts say. Brookes said that the charity has 19 shops that were used to give away free books, but did not say how many other shops it occupied.
A spokeswoman for the Communities and Local Government department, which has responsibility for business rates, said: "Business rate discounts for charities are well established and reflect the wider public benefit that charities provide to society. But councils should take firm steps to investigate and stop tax evasion by bodies exploiting these tax breaks."