Insolvency experts handling the administration of the Society of the Friends of the Torah (Soft), say “it will not be possible to rescue the company as a going concern”.
RG Insolvency has found that the charity voucher company has assets of around £2.3 million - with cash of around £750,000 and premises estimated to be worth £1.5 million.
But after the cost of administration and as yet unknown liabilities are deducted, they cannot calculate what, if anything, might be left over.
The society - which was used by members of the Orthodox community to make charitable donations - recorded an income of more than £17 million in 2016 and nearly £21 million in 2017.
In a published report, RG Insolvency has documented events that led to Soft being placed in administration.
“It appears that during the course of an audit of another charity, the auditor of that charity made inquiries of a sample of voucher charities, including Soft.
“Soft’s records reported a total of c.£785,000 being paid to that other charity during the period, which was significantly more than the c.£340,000 receipts shown in that charity’s records.”
After Soft’s auditors took professional advice, the charity’s trustees notified HM Revenue and Customs and the Charity Commission.
HMRC suspended the repayment of £110,000 of Gift Aid claims by Soft and rejected an appeal “on the grounds of public policy, where HM Revenue and Customs believe that their own tax claim may be higher than any repayment due to the charity”.
Soft has a further £120,000 on which it has yet to claim Gift Aid.
The administrators are working with accountants BDO and liaising with HMRC to determine how much tax may need to be paid.
“Given the uncertainty over the level of this liability and the suspension of Gift Aid tax refunds, it has not been possible to continue the trading operations of the charity,” RG Insolvency said.
Donors to Soft do not count as creditors. But the administrators have indicated that any money left over could be distributed to another, similar charity.
