A director of the corporate trustee of the Cup Trust has been fined £70,000 and banned from the accountancy profession for a decade, following a scandal in which a charity was used as a £46m tax avoidance vehicle.
John Mehigan, a director of Mountstar, the corporate trustee of the Cup Trust, admitted that his conduct “fell significantly short of the standards to expected” and breached the standards of due care laid out by the Institute of Chartered Accountants in England and Wales. In addition to the fine and the ban he has agreed to pay £80,000 to cover the costs of proceedings.
The Cup Trust’s auditor, Phillip Collins, received a reprimand and was fined £20,000, and his company, Hillier Hopkins, received a reprimand and was fined £100,000. They will make matching contributions to cover costs.
Disciplinary cases by FRC
The decisions follow disciplinary cases by the Financial Reporting Council, the governing body for the accountancy profession.
The Cup Trust was a scheme in which a charity received £176.5m from donors, between March 2009 and March 2011, and spent that money on buying government bonds and then sold those bonds for less than £17,000. The charity donated only £55,000 to good causes but put in claims for £46m of Gift Aid, which were not successful.
The FRC launched an investigation into the Cup Trust in 2013, to assess whether anyone had committed “misconduct with respect to the establishment and operation of this charity and any related tax planning issues”. A year later it expanded the scope to consider the audit and preparation of its accounts.
Gareth Rees QC, executive counsel to the FRC, said: "The administration of charities, and the operation of tax avoidance schemes, are both matters where professional accountants should be aware of the heightened level of public interest in their work, and consequently the importance of complying scrupulously with ethical and competence standards.
“The lengthy period of exclusion for Mr Mehigan reflects the seriousness of his failure to exercise independent judgment when making key decisions on behalf of the charity. The admissions made by Mr Mehigan, Hillier Hopkins and Mr Collins have resulted in a significant saving in time and costs which has been taken into account in the agreed sanctions.”
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