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Four Jailed For Million Pound Charity Tax Fraud

by Jason Gorringe,, London

11 June 2007

It emerged last Thursday in the UK that four people had been jailed for a total of 19 years in Manchester for their part in a million pound tax fraud involving public donations, which was discovered by HM Revenue & Customs (HMRC) investigators.

Two men (Trevor England and Paul Johnson) and three women (Mary Johnson, Donna Siddaway and Andrea Glancy) were charged with offences related to False Accounting and Cheating the Public Revenue contrary to Common Law. The charges centred on theft, failure to operate PAYE taxes and abuse of Gift Aid schemes.

According to HMRC, Trevor England was one of the original co-founders of the charity of CATCH (Care and Action Trust for Children with Handicaps). Over the years the charity (and associated charities) came under the scrutiny of the Charity Commission due to the low percentage of donations which was actually applied for charitable purposes and the remuneration packages available to the founders and management in the organisation.

England went on to found Catch Trading Co Limited, a trading company set up to engage in commercial activities which the charity could not engage in, due to its status and constitution. The whole CATCH organisation was based in and around Swansea, but as it had no fundraising arm it originally contracted the fundraising to a company in Manchester, Drawtreat Limited.

Mary Johnson was the sole director and shareholder of Drawtreat Limited, a company contracted to CATCH to fundraise and provide databases of donors. CATCH and the concurrent trading company Catch Trading Co Ltd employed other Johnson family members in the fundraising organisation based in Manchester.

By the late 1990s, the Charity Commission had expressed increased concerns about the CATCH operations, and alongside KMPG instigated a fuller investigation. The investigation identified dubious donors and in 2002, the Charity and trading company were compulsorily wound up in Court and official liquidators appointed.

A subsequent investigation by the Inland Revenue (now HMRC) uncovered disguised donations and other accounting anomalies which indicated directors and employees were benefiting personally from donations and repaid tax. In addition, substantial amounts of over repaid tax were identified following the introduction of the Gift Aid scheme in the UK in 2000.

During the HMRC investigation it was found that some of the donors on the database were falsely listed as famous fictitious cartoon, TV and film characters. It was also evidenced that some donations from limited companies were disguised as made from individuals to illegally claim Gift Aid repayments. It additionally transpired that not all donations apparently received were banked.

Commenting on the case in court last week, Judge Hammond observed that:

"People were more than willing to give to charities and even more so to charities that looked after sick children. I regard people who collected for these charities to hold a position of trust and anyone stealing that money was in breach of that trust and will be sentenced accordingly. Those involved collecting for this charity were in business to make a living for themselves."

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