Now that’s what I call tax avoidance: the Cup Trust
THIS story is really rather mindboggling. A charity that raked in £176 million over two years and then donated £55,000 to other charities. The rest of the £176 million went on fund raising costs. I have to say that I’m stunned by the audacity of it to be honest.
It’s entirely different from all of the various bits of corporate tax avoidance that the newspapers have been full of. Starbucks, as an example, simply didn’t make UK profits so they shouldn’t be paying any UK profit tax. The Vodafone thing was about who rules? UK law or EU? To which the answer is EU. And it’s possible to go on down the list of all of the UK Uncut campaigns and point out that they’re just not tax avoidance.
This, The Cup Trust, is most definitely tax avoidance: recall, avoidance is the legal stuff, even if it’s the stuff that people would rather wasn’t legal.
You can see the Charities Commission release here. It’s all legal and it really is a charity. So it cannot be closed down.
How it actually works is described here. Although that’s still a bit garbled. I’ve not yet seen a proper description of how it worked that made sense. Put simply, the charity would buy some gilts, government bonds. They’d then flog them cheap to their customers. Who would then donate them back to the charity. At which point the charity flogs them and repays the loan it used to buy them.
It’s entirely circular. Except, those who donated those gilts can now claim gift aid on having done so. Which appears to have led to a tax loss of £45 million or so.
Or maybe not actually: gift aid has to be approved by HMRC. And it’s not approved it yet in this case: and might never do so. So there’s still the possibility that that there’s been tax avoidance: and the possibility that there won’t be.
Does tax avoidance exist? Oh yes, indeed it does. Are the corporations that everyone’s shouting at doing it? No, not so much. But this charity is clearly and obviously playing the games just for that tax relief. And it’s that we should all be getting het up about, not what the companies are doing. Which is mostly just doing exactly what the law says they should,
Posted: 11th, February 2013 | In: Money Comment | TrackBack | Permalink
