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06.03.2013

Gift Aid Scam

£46m of tax has been avoided by donors using the gift aid scheme.

The charity “Cup Trust” used an offshore bank loan to buy £1m of gilts.  These were then sold to an investor for a nominal amount.  The investor paid a fee to join the scheme.  The investor would then sell the gilts and “donate” the money back to the Trust.  This allowed the “donor” to claim between £250k and 375k in gift aid relief, depending on their tax rate.  The Trust then used the “donation” to pay back the loan.  The Charity Commission investigated but could find nothing wrong!!  HMRC won’t say if it has accepted these claims.

The 2011 accounts make interesting reading.  These were not qualified by the auditor!

The reputation of the charity sector could be damaged by this circular gift aid scam and the Charity Commission will appear before the Public Accounts Committee to explain its actions on the Cup Trust.

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