The former trustees of a now defunct charity that enabled companies to avoid £17m in business rates by installing bluetooth transmitters issuing public safety messages from thousands of properties have been disqualified from being company directors.
A report published by the Charity Commission about its inquiry into the Public Safety Charitable Trust says the charity leased empty properties from business owners at a peppercorn rent and installed bluetooth transmitters in them to broadcast messages to passers by.
The report says the charity held about 2,000 leases for properties in 240 local authority areas at the time the commission opened its inquiry in 2013.
Charities receive mandatory discounts of 80 per cent on business rates if the property is used wholly or mainly for charitable purposes, and councils can offer a discretionary discount on the remaining 20 per cent.
The property owners typically gave donations to the charity as part of the arrangements. But the set-up was challenged by three local authorities and the Court of Appeal ruled in 2013 that the installation of the transmitters did not mean the properties would qualify for charitable relief, so the charity became liable for about £17m in business rates.
This forced the charity into liquidation, but action by the liquidators caused the regulator’s inquiry to be put on hold until January this year.
The commission’s report says the liquidators took action against one of the former directors for misfeasance and an agreement was reached with this director, who is not named in the report.
The report says former trustees Mark Ferguson and Christine Sutton were disqualified from being company directors or holding senior positions in charities for nine and five years respectively, from May 2017 in Ferguson’s case and from July 2015 for Sutton.
It says the regulator had concluded there was evidence of misconduct and/or mismanagement in the administration of the charity.
“The trustees made decisions which exposed the charity to risk of liability for business rates,” the report says.
“They continued to lease properties, despite ongoing legal challenges to the operating model they had adopted, which further exposed the charity to risk and the charity did not have the resources to meet these liabilities.”
Amy Spiller, head of the investigations team at the Charity Commission, said the trustees of the PSCT “undermined the meaning of charity” by enabling businesses to avoid paying business rates, resulting in the charity taking on huge liabilities it could not afford, which led to its demise.
The charity will be removed from the register of charities once the liquidator’s final report and forms are submitted to Companies House to dissolve the company, the Charity Commission said.