The trustee who set up the Cup Trust tax avoidance scheme admitted to the Charity Tribunal yesterday that his partnership had been in line to make around £3.5m in fees if the gift aid claims submitted to HMRC were successful.
Matthew Jenner, settlor of the Cup Trust and former sole trustee of Mountstar (PTC) Ltd, was also a director of the tax advice firm advising donors to the scheme operated by the Cup Trust.
Thus he was in line to receive fees of around 2 per cent of the £176m that has passed through the scheme since 2010 – if the gift aid claims are paid by HMRC. However, HMRC has suggested they won’t be paid and in May this year Jenner quit as a director of the advisory firm. Now, if the gift aid claims are paid, the fees will go to the new owners - members of Jenner's extended family and the extended family of his civil partner.
Jenner, who has set up and run many controversial tax avoidance schemes, was giving evidence in his role as trustee of the Cup Trust’s Caribbean-registered corporate trustee Mountstar, which is taking the Charity Commission to the tribunal to challenge its decisions to open a statutory inquiry and install an interim manager at the charity.
Jenner told the Tribunal judges that his tax affairs are “very complicated” and it was “not uncommon” for him to walk away from potential large windfalls.
“I have a lot of earnings from the tax schemes I’ve operated in the past,” he said. “I’m not particularly motivated by money.
“The thing about this particular scheme, the motivation was where the charity, for once, could have made a substantial amount of money. There have been other schemes in the past involving charities where they’ve made just a small amount of money.”
Jenner was also cross-examined by the Charity Commission’s barrister, Ben Jaffey, about fees for a fundraising agency that Cup Trust hired to introduce donors to the scheme.
Even though Harry and Associates did not actually do any work for the charity, it was due to receive around £6.3m in fees should the gift aid claims succeed.
Jaffey suggested that a responsible charity trustee would have attempted to renegotiate such high fees, particularly as the agency wasn’t actually doing any work under the agreement.
But Jenner responded that a responsible trustee would look at the bigger picture, and compare the potential gift aid income of £46m with the £6.3m in contingent fees.
The Tribunal also heard about Romangate, another entity that acted as a trustee for all parties involved in the scheme and ensured that it was not necessary to physically move any money in order to execute the various transactions. At one point, said Jaffey, two of the directors of Mountstar were also directors of Romangate.
And Jersey-based Romangate once had 500 directors, all of whom were participants in another high-profile tax avoidance scheme.
Jaffey said there were clear conflicts of interest in the case, which the Charity Commission had identified. The regulator was wholly right to open a statutory inquiry and appoint an interim manager to the Cup Trust, he contended.
Tribunal chair, Judge Nigel Gerald, told Jenner: “The impression you give is that as long as money is transferred from HMRC to the charity, it does not matter what kind of fees were charged.”
The Charity Commission opened its inquiry into the charity after The Times reported that it was running a tax avoidance scheme. The charity has made grants totalling £152,000 to charities since it started in 2010, despite taking in a total of £176m. Its donors have reportedly benefited from tax relief totalling up to £55m, and Cup Trust has submitted gift aid claims totalling £46m.
The case is continuing and due to finish today.
