Just some of the charity shops in Penarth

Unlike ordinary businesses, charities can legitimately claim rate relief.

In evidence to the Welsh Government, the Vale of Glamorgan Council has listed graphic details of how some  registered charities in the Vale are helping landlords  of local business premises  avoid paying their full-whack of rates.

In doing so, the charities are being consciously complicit in rip-off tax-dodging schemes which help local property owners avoid paying rates on their buildings at the expense of ordinary, honest, taxpayers.

It is also being suggested that some registered charities may have been specifically formed  just to play the system –  and that some food banks and “churches”  are involved in scams which are disadvantaging honest taxpayers .

This is the way the Vale Council says the charities scam works:-

  • The property-owner arranges for his property it to be occupied by a registered charity.
  • By law the charity then is able to claim an 80%  Mandatory Rate Relief .
  • On top of that  80% Mandatory Rate Relief, the charity – the Vale Council says  –may also be granted the additional 20% [Rate Relief] due to their charitable activities (food bank, church etc.)”  – which means that neither they – nor the property owner – pay a bean in rates or council tax.

The Vale drops a heavy hint that in some instances the charities involved may well be receiving backhanders from their landlords in return for all the Business Rates that they no longer need to pay.( i.e. putting a charity into empty business premises is a “win-win” for both parties.)

Some foodbanks, such as this one in Plassey St, Penarth - can legimiately attract attract rate relief.

Charity foodbanks, such as this one in Plassey St, Penarth – legitimately obtains 100% business rate relief .

The Vale Council is telling the Welsh Government that where charities are involved in such arrangements , steps should be taken to ensure “that the charitable use of the property is clearly established; the charity is bona fide; the charity has been established not  for rate avoidance but for other worthy causes and the charity has not been given a financial incentive by the landlord /agent to enter into the lease agreement.”

There are other dodges too – not involving charities.

TAX DODGE NO 2:  The “Blue-Tooth” Exemption

The occupant of a large property with a high Rateable Value occupies just a small area of the big building – just enough for a couple of “boxes of files and a Blue-Tooth device“. He stays there for just 42 days. This tactic then gains him 6 months exemption from paying any rates. The property owner too is sitting pretty – with no rates to pay.

TAX DODGE NO 3:  Company Musical Chairs

A big building with a high rateable value is first occupied on the basis Tax Dodge No 2 see above). Then,  after the 6 months’ exemption period is up, the original company moves out of the “rented” building and a different – but related – company moves in.  This triggers a new period of 42 days  followed by a further 6 months’ exemption.

TAX DODGE NO 4:  The Square Dance  

This involves an agent declaring that only part of the building is occupied – and  only for a short period.  Goods or stock are moved into the building to occupy just a portion of the floor space. Then the goods are moved to “another area” [within the same building] “thus changing the divided Rateable Value ratio and gaining another period of statutory exemption” . No rates are paid.

TAX DODGE NO 5: The Phantom Occupant 

This time the building is empty – and stays empty. Normally this would mean the owner would have to pay the rates due on the building  – but the owner retrospectively – and dishonestly – claims the property was “occupied”  for the statutory 42 days. He gets 6 months exemption, claimed in retrospect.   The Vale Council may have a strong hunch that the property owner is lying through his teeth and is actually committing fraud BUT , the council says “the onus of proof is exceptionally difficult until a pattern has been established.”

TAX DODGE NO 6:  Small Business Rate Relief

Here the building  – or land –  has a Rateable Value “greater than £2,600 (exempt from Empty Property Rates (EPR) threshold) but below the £6,000/£12,000” mark. It is asserted that the building is “occupied” . This means the owner gains Small Business Rate Relief rather than having to pay Empty Property Rates.

The Vale of Glamorgan Council is suggesting to the Welsh Government that the “42 days occupation period”  before granting exemption is increased to 6 months for industrial buildings and 3 months for retail premises.

It also wants the thresholds for Empty Property Relief and Small Business Rate Relief to be “considered together to avoid the practice of claiming SBRR occupation as a “better buy”.

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  1. PDN, thanks for posting! That’s really interesting. Ta/Diolch/Merci/Danke/Kiitos

    • Philip Rapier says:

      This is a serious problem but just wait till we join with Cardiff all will be well as there are no such problems there just a thriving economy with plenty of busy shops of all kinds giving a fabulous warm welcome room for everbody- charity or otherwise. Most of this questionable “creative accounting” is being done with Funds provided by the Westminster Government in the first place. Do we really want to give the money straight back to them by prohibiting tax mitigation is the question? If the answer is yes then don’t give it to them in the first place. Heres why………………..
      Kids Company remember them, the Westminster Cabinet and those “photo opportunities” taken whilst personally authorising money that was wasted on free lunches £200 trainers and swimming pools.. They actually gave them £3million days before it closed – fearing a public outcry.
      From the Daily Mirror 29 Oct 15
      “Kids Company received “at least £46million” of taxpayers’ cash before collapsing last summer £9million above previous estimates of the amount of public money pumped into the controversial charity, which folded last August amid a cash crisis Despite warnings sounded on six separate occasions, according to spending watchdogs. But still the Government showered money on the charity – ……………i
      The Department for Education pressed for more cash to be handed over, claiming the Government would suffer “reputational damage to its wider agenda” if funds were denied, says the National Audit Office.”

  2. Christopher David says:

    I am not surprised one little bit. The charity sector needs a UK wide root and branch overhaul. My suspicion is the Charites Commission needs the same. Charites undermine business on the high st with their business rate advantages. They have good people on the front line being taken advantage of working for nothing whilst those above them earn hug salaries. Ask Stephen Doughty- ex Oxfam wasn’t it? £60,000 PA plus perks! He’s on the lower end though. At the top it seem £100,000 is the start for directors of the big charities, some being paid up to £500,000 PA. Add in pensions, “expenses” cars and chauffer’s, free housing etc, its a scam. Some of the names skimming off these huge sums to line the pockets of the people at the top may surprise you. The small honest charities might be suffering as they may be tarred with the same brush. If its on the telly- be very wary. But they are the thin edge of the wedge. Charities fool you with statements like “90% of our money goes to the front line”- well the sums are so huge the proportion creamed of for the management makes them millionaires very quickly. Charity- its a great business. My view is no one working for a charity (or charity commission) should be paid more than the living wage. Its CHARITY!! ….. isn’t it? I hope that for starters the VOG get the police involved and prosecute.

    • RetailGuru says:

      Whilst their is a lot wrong with the charity sector I feel compelled to comment on your post.

      Which charity pays £500k p.a. Christopher? I’m not aware of any. You’ll find that a typical charity shop manager will be earning around £18k, their area manager £25k – £30k and the director around £45k – £50k. You’ll find that the Director will often be responsible for hundreds of staff, and generating many millions of pounds of NET income for the charity. It’s a high pressure environment and a position of huge responsibility, and requires specialist knowledge. Not something that you can buy for the living wage I’m afraid.

  3. RetailGuru says:

    I think we need to be careful here. PDSA, Oxfam and Ty Hafan etc are not partaking in ‘back handers’; to a degree your graphic images of the shop fascia’s at the start of this article associate the inflammatory comments to these worthy charities. YES, charities do receive rates relief and the ethics/validity of this is a discussion that has already taken place with Welsh Government and has been parked for the time being.

    Should they receive 80%/100% relief? Probably not. Most of the charity shops in our town are highly profitable (ie £150k+ takings and £75k+ NET profit each year) and occupy the same prime position as locally owned businesses who pay the full rates and struggle on or even close down (eg Windsors Gifts/Home). However, I can’t see the situation changing any time soon. It’s a hot potato. After all, which government is going to have the courage to deny charitable income from some very worthy causes? Certainly not our impotent labour administration.

  4. Nigel Bull says:

    Whilst Mr David does make some valid points, his knowledge is either sadly lacking or he is fresh from reading his Daily Mail. The Charity Commision is a government organisation that has suffered huge cut backs, knobbling any chance on monitoring all charities to the extent required. The vindictive wish for those civil servants who do their best to keep the likes of Eton from abusing their position to exist (for that is what happens) on the living wage detracts hugely from the argument for a total revue of the third sector.

    The biggest issue for us in Wales is the use of government money to fund third sector organisations stuffed full of Labour supporters that then use those same funds to publically support Labour’s policies as supposedly independent organisations. The Awema debacle is the most well known and another of the many is Sustrans Wales ,who directed funds via Lee Waters that well known Institute of Welsh Affairs / Labour Llanelli WA candidate merry go round rider into supporting the 2011 referendum. I could mention more, but terminal apathy has set in…..

    Nigel Bull

    • Dan Potts says:

      Thanks for highlighting sustrans Nigel , they are politically motivated and in my opinion suspect.

  5. Christopher David says:

    Mr Retail Guru: Sorry but you’ve completely discredited that grand title with one un researched post.
    Lets get some real facts. I don’t care about the skills needed. Charity is charity or was- and its now big business designed to enrich more members of the “Club”. The public must get up to speed with this scandal, stop being naïve and insist the sector is overhauled. If you can’t get worthy people; for example retired businessman / women to do these jobs for the living wage or just reasonable expenses, they are not charitable and its not charity. I say once again small charities are suffering because of this. Big budget charities with heart string multi million pound TV adverts taking money off really worthy causes. Take the Nuffiled boss (and don’t forget there are several big earners behind these bosses in each charity) Say the average donation was a fiver (I’m mindful of what the adverts ask for!) His total costs with pensions et all are probably over a £1Million PA. So that’s means the first 200,000 donors are needed to pay just him before the charity receives a penny for those the donations are intended for,
    The highest paid charity bosses as individuals
    The highest paid chief executive was David Mobbs of Nuffield Health, who earned between £780,000 and £790,000. The top ten earners are as follows:
    David Mobbs, Nuffield Health. Pay range: £780,000-£790,000
    Paul Holdom, London Clinic Trustees. Pay range: £390,000-£400,000
    Jeremy Farrar, Wellcome Trust. Pay: £394,000
    Simon Cooke, Marie Stopes. Pay range: £370,000-£380,000
    Michael Anderson, CIFF (UK). Pay range: £360,000-£370,000
    Gil Baldwin, St Andrew’s Healthcare, Pay: £343,000
    Peter Vicary-Smith, Consumers’ Association. Pay range: £330,000-£340,000
    Nigel Fine, Institution of Engineering. Pay range: £320,000-£330,000
    Alex Beard, Royal Opera House. Pay: £250,000
    Harpal Kumar, Cancer Research UK. Pay range: £230,000-£240,000
    Source The Civil Society.

    Politicians are always here somewhere when there’s a trough. Take the salary of the American charity’s boss, David Miliband- remember him?.
    ” I can disclose that the above Blairite former Foreign Secretary, was allocated a staggering $600,000 [£425,000] per year by International Rescue.
    Source: Daily Mail- a rag yes but it checks out. This is an international charity. Add in housing pension, chauffer car etc and it comes ot over £500,000 PA

    So Mr Retail “Guru”. I hope you’ll now correct yourself please.

    • RetailGuru says:

      Christopher, I don’t see many Nuffield Health shops on Penarth Windsor Road, which I believe was the original topic of debate :-)…eg well known charities ‘dodging tax’ and taking ‘back handers’ for rates relief. Neither do I see Nuffield Health spending a fortune on public donation campaigns on primtime TV. You have an exceedingly warped view of charities, and I’m really not sure of your REAL motivation. Perhaps you were turned down for a fat cat job at a charity once.

    • RetailGuru says:

      And, Christopher, with regard to attracting retired individuals to work for charities on the living wage “or reasonable expenses”, you clearly have never experienced life in the third sector as I can tell you that the charity sector already has retired individuals – they are called trustees and are the guardians of each charity. It is incredibly difficult to recruit experienced and knowledgeable trustees, so your grand plan to do away with highly skilled staff (of working age) on reasonable salaries and replace them with retired individuals on expenses or the living wage would be a disaster for the sector.

      • Lindsay says:

        I admire your attempt to take on Mr David in this little forum, but it really is a waste of time. He has entrenched, extreme, oft repeated views on all matters public and charity sectors with a total refusal to consider any contrary view Best to let him get on with it I think!

      • Frank Evans says:

        Lindsay. Pot calling kettle…..

  6. Christopher David says:

    The facts speak for themselves Mr BULL. I’m afraid your rather indicative of the problem we have. One of those that go off at tangents hoping to score cheap points, stabbings that have little bearing on core problems. You cant even understand simple sentences. I stated the Charity commission needs overhauling not cutting back. In fairness to them they are hamstrung by other “Club” members-the politicians who want another “Club” appointment when they get booted- witness Miliband. As for the Dally Mail, I’ve always thought of it as the Sun for those with a few GCSE’s- know anyone?

  7. RetailGuru says:

    Thanks for the heads-up Lindsay, I thought as much.

  8. Christopher David says:

    Only when faced with the bone of ignorance snogger. Guru old bean- no I have never been turned own for a job in the third sector- I don’t need one. I work part time in my own business from Wales and SW France- where its sunny and the people aren’t insular. As for your drivel re Nuffield on Windsor Rd (or even Barry high St hah) that’s just you showing your stark limitations. In fact (remember them) I have a suspicion you know you’ve been found out ( “Which charity pays £500k p.a. Christopher? I’m not aware of any” well you know now) and are foundering now to try and save face. Don’t bother, no one with any experience will take any notice of you, although you may engender some sympathy if you give the elusively named snoggerdog his bone back :-). Yes guru, my plans would be a disaster for “the” sector- well “the” leaching bit anyway. But the honest charities that don’t have the big budgets would benefit enormously- and they don’t require 200,000 donors just to pay one charity made millionaire his salary and “perfectly reasonable” car and chauffer overheads. So friends- if you want to carry on having millions swiped by charity bosses see the Guru- he can help. Guru my aunt- how ruddy narcissist. Self-promotion, ingratiation, and other manipulative strategies are just a few of the ways that narcissists can trick the unsuspecting into thinking they’re the real deal.

  9. Ophra Singer says:

    Love the way some here seek to take down someone who actually tells it as it is and is factual. They snipe then whinge when shown up. Keep it up Mr David. Its just bruised egos getting miffed with you.

  10. Nigel Bull says:

    Mr David

    Your only comment other than “reform ” of the Charity Commission was to say that no one should earn more than the living wage! Now just how your think an organization with hundreds of employees could be operated, let alone managed when paying only a living wage suggests a previous painful divorce from reality and an expensive settlement!

    Whilst it is quite clear that I agree with many of your points, I also find the point that prompted the above to distract from the important issues. You may find a little less enthusiasm and a little more thought before posting might gain your thoughts more support. Perhaps you were in France when you typed your initial comment and local vino brought out the cyber warrior in you! Having a second place to live whilst wishing reduced salaries on lower grade civil servants smacks of “I am all right Jack”

    We have massive problems with increasing inequality, immigration and housing in this country which have to be properly addressed soon or the inevitable result will be revolution. “Jacks” like you really will then have plenty to complain about from France!

    It’s been fun, but I really am tired of this now Mr David. Perhaps the best option might be for you stand as a councillor in Penarth as you have plenty to say as to how things should be run, given your frequent critical postings on here. Also as you work only part time you are able to put reputation and time where your opinion is. There again, as you say you spend time in France you might better take your thoughts to the electorate there as corruption within areas of governmental influence have far more scope for your prescribed remedies to work.


  11. Don says:

    Mr David is right about the salaries and mind boggling they are, however, Mr David why so aggressive? Too much £1.70 plonk maybe!?

  12. RetailGuru says:

    …and this is why I love PDN! Very entertaining!

  13. Christopher David says:

    Thanks Ret I aim to please 😉 Who are you anyway? I mean forget the also amusing Guru non de plume- what’s your real name?

    • I agree. It is a shame that people use pseudonyms on a community site like this. If you’ve got something to say you shouldn’t be afraid to say it under your real name.

    • RetailGuru says:

      Hello Christopher. Firstly, I don’t believe that I have been rude to you. We may not agree on everything, but I believe that we have enjoyed good natured banter. Secondly, being a Welsh business person I would rather not state my opinions under my name, which would be recognised by some people (including existing and potential clients) on matters such as immigration, EU membership or the pay of senior executives – otherwise my businesses (which I’ve worked hard to grow and be successful) might be affected by my personal views. However, I’d like to contribute to the debate and use my experience and knowledge to join in. Is that OK with you? 🙂

  14. Christopher David says:

    Fine Ret- actually I do understand as I’ve had similar concerns but as I’m part time now and don’t have to pander then to hell with it (Google Chris David WDA and you’ll see how I’ve been attacked at “high” level 🙂 ). I’m very happy with the banter unlike some feeble types here- as long as you don’t moan. Yup, mostly in the sprit of fun as far as I’m concerned- but some hide because they don’t have the guts to front up they’re assertions, then moan if tickled.

    • Retailguru says:

      I’m looking forward to being in your position and having the freedom to say ‘to hell with it’, but for the time being I’ll have to remain a retailguru!

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