A Charity Commission inquiry into a poverty charity has resulted in over £13m distributed to good causes, and the disqualification of the charity’s former chair following findings of breaches of trust, misapplication of charity funds and failure to manage conflicts of interest.

As a result of the trustees’ conduct a potential tax liability of up to £3.5m was identified. With no trustees remaining, the inquiry appointed an interim manager from PKF to take over the administration of the charity, settle any tax liability and make a determination on the charity’s future.

The charity’s potential tax liability arose because either the sale of commercial properties in 2005-2006 constituted taxable trading by the charity, for which relief does not apply, or alternatively the profits (or gains) from the property transactions were subject to tax as a result of the trustees’ misapplication of the charity’s funds in Iraq for non-charitable purposes.

HMRC indicated that the potential tax liability facing the charity was up to £3.5m, including interest and penalties.

Full report: Charity Inquiry: Relief for Distressed Children and Young People