CCNI inquiry report into charity facing major HMRC tax bill

The Charity Commission for Northern Ireland has today published an interim inquiry report into the charity, Victoria Housing Estates Limited (VHE).

VHE was established in the 1950s as an Industrial and Provident Society with objectives to: carry on for the benefit of the community, the business of providing housing and any associated amenities for persons in necessitous circumstances upon terms appropriate to their means; and provide for aged persons in need thereof housing and any associated amenities specially designed or adapted to meet the disabilities and requirements of such persons.

The charity manages over 420 properties which are let to tenants in a number of areas, including Riverdale, Andersonstown; Worcester Avenue and Crawfordsburn Road, Bangor; Holywood Road, Belfast and Clonaver Drive, Belfast. In addition, VHE collects ground rent for approximately 600 properties and parcels of land.

The Commission opened a statutory inquiry into the charity in July 2012 following concerns raised by HMRC. Under the inquiry, the Commission appointed PricewaterhouseCoopers LLP (PwC) as an Interim Manager and directed that they conduct a forensic examination of the charity.

In December 2015, the Interim Manager provided that forensic report to the Commission, highlighting a number of areas regarding the misapplication of funds. This included that over £13,000,000 of charity assets had been advanced as loans to various companies of which one of the trustees had an interest. Full details of this and other matters detailed in the forensic report are available in the interim inquiry report.

The Commission was quick to act, removing a charity trustee, giving notice of intention to remove other trustees (who subsequently resigned) and taking court action to commence the recovery of monies misappropriated from the charity. This legal action is ongoing.

The charity now has a new Board, which has identified that over £21,000,000 is required to bring the charity’s properties to an acceptable standard. The charity has also been presented with a significant HMRC bill (approximately £2,800,000) as a result of the former charity trustees failing to use the charity’s assets solely for charitable purposes.

VHE’s new board has joined the Commission in the legal pursuit of recovery of misappropriated charity funds.

Myles McKeown, the Commission’s Head of Enquiries and Compliance, said: “This inquiry has been one of our largest to date. Ongoing court processes, alongside the volume of the misappropriation of charity assets, meant this inquiry has been particularly complex and protracted.

“Despite this, we have remained determined in our approach and the inquiry is a good example of where the Commission has identified a major risk to a charity’s assets and taken the appropriate action to investigate and resolve matters.

“The VHE case is not closed and the Commission acknowledges that the charity has suffered significant losses due to the previous management. However, we can assure the public, and the charity’s beneficiaries that we, and the charity’s current board, are working to recover funds and ensure any remaining assets are used to fulfil the charity’s purposes.”

On conclusion of all legal matters related to this inquiry, it is anticipated that a more detailed final report will be produced.