Tuesday, 14 May 2013

Multi-Million Pound Tax Avoidance Scheme Stamped Out

A nationally significant multi-million pound tax avoidance scheme has been stamped out after South Cambridgeshire District Council teamed up with two other local authorities to take High Court action.

In a case being watched closely by Councils throughout the UK, the Council alongside Milton Keynes Council and Cheshire West and Chester Borough Council took action to stop the Chester based charity, The Public Safety Charitable Trust Ltd claiming charitable relief from business rates on empty commercial premises, from which they broadcast public safety messages.

The High Court has today (Tuesday 14 May) ruled that the Trust must now pay almost £350,000 of business rates to South Cambridgeshire District Council as well as costs totalling over £15,000.

The Trust had taken on over 30 leases of otherwise empty business premises in the district which were liable for business rates. It paid a nominal rent to landlords and placed transmitters in the premises offering free wi-fi and sending messages to Bluetooth-enabled devices in the area.

The landlords also paid the Trust a premium to reward them for the savings they made on their business rates.

Up and down the country the Trust has leases on over 1,000 premises and affected councils will now be applying to the Magistrates’ Court to claim millions of pounds of unpaid business rates.

The Trust had argued they were entitled to relief from business rates because the premises were being used for charitable purposes.

It is shown on the Trust’s annual return in 2011 that out of an income of £1.6 million, the Trustees Mark Ferguson, a former Headmaster, and Chrissie Sutton, a financial advisor, had authorised all but £48,000 to be paid out to Commercial Link LTD – a private firm from Chester who provide bluetooth and wi-fi services.

Cllr Simon Edwards, South Cambridgeshire District Council’s deputy leader and cabinet member for finance, said: “We quickly identified this as a tax avoidance scheme and are delighted that the High Court has ruled in our favour as this is a nationally significant case that will protect the public purse. Business rates collected in the district are an important source of income for us to provide services and we are proud of the fact we have one of the highest collection rates in the country. This judgement should send a strong and clear message to anyone looking to avoid paying rates due.”

The councils were represented by Mr Cain Ormondroyd of Francis Taylor Building and the Trust was represented by Mr Simon Myerson QC. Mr Justice Sales heard the appeal on 1 May and handed down his Judgment in writing today.