The Financial Reporting Council (FRC) is to extend the scope of its investigation into the Cup Trust, the charity which faced charges of accounting irregularities and Gift Aid abuse, and will now look at the role of the auditor
The regulator has confirmed that it will examine the audit work done by Hillier Hopkins in the preparation and audit of the financial statements for the charity for the years ended 31 March 2010 and 31 March 2011.
The FRC’s investigation into the Cup Trust under the Accountancy Scheme was announced in December 2013 and is looking at whether there has been any misconduct with respect to the establishment and operation of the charity and any related tax planning issues, both of which have proved highly controversial.
In a statement, the audit firm told Accountancy: ‘Hillier Hopkins LLP has been cooperating with the ongoing investigations by the FRC. We have not been informed of the nature of the extended investigation which the FRC is now conducting, beyond the information in their press notice. Consequently we have no further information on which to make comment at this time. We will continue to fully cooperate with the FRC.’
The Cup Trust had an income of £177m but gave just £152,292 to good causes as part of a suspected abuse of the gift aid tax rules, according to a highly critical report on the charity's operations by the National Audit Office (NAO).
Last year, HMRC won a case at First Tier Tribunal (FTT) where the judges ruled that the charity was a disguised tax avoidance scheme, and Cup Trust's claim for payments of £46m in gift aid relief was refused.
Subsequently, the Charity Commission announced an inquiry into its operations in April last year, which has yet to complete. The Commission's own handling of the Cup Trust's affairs, and the charity itself, were strongly criticised by the Public Accounts Committee in a report which said its approach to regulation and enforcement lacked rigour.
The scheme was promoted by a tax advisory partnership called HNW Tax Advice Partners run by two partners, Matthew Jenner and Anthony Mehigan. Jenner was also a director of the corporate Trustee, Mountstar (PTC) Limited, although he resigned following the Charity Commission's investigation. Mountstar was an entity based in the British Virgin Islands.
