The Charity Commission has opened a compliance case against a major donor to Prince Charles’ charity after it emerged it had been funded by unsecured loans.
The Barrowman Foundation, a platinum donor to the Prince’s Trust, has not recorded any donations in its published accounts since its inception and is funded by loans from its founder, businessman Doug Barrowman.
Barrowman is the head of a financial group that includes companies that promoted self-employed tax avoidance schemes who are now being prosecuted by HM Revenue and Customs (HMRC). Campaigners have previously criticized the decision to name one of the Prince’s Trust centers after the businessman.
The unusual funding arrangements for Barrowman’s charitable foundation are currently under review by the Charity Commission. The Barrowman Foundation said it had complied with all accounting rules and guidelines from the Charity Commission. A Charity Commission spokesman said: “We have now opened a regulatory compliance case against the Barrowman Foundation and will engage with the trustees to assess the concerns.” Officials said opening a compliance case is not a finding of wrongdoing. One of the charity’s trustees is conservative pair Michelle Mone, who was named business start-up czar by David Cameron in 2015 and married Barrowman in November 2020. The other trustee is Arthur Lancaster, a business associate of Prince Andrew.
The Barrowman Foundation is one of the principal patrons of the Prince’s Trust. The Prince’s Trust Doug Barrowman Center was opened in Manchester in September 2019 to help young people access education, find training opportunities and find jobs.
Barrowman heads the Knox group of companies in the Isle of Man, of which AML Tax (UK) is a member. He was accused by HMRC earlier this year of ‘aggressively’ promoting tax avoidance schemes and was fined £150,000 by a tax court in March for failing to hand over the necessary documents to the calculation of their tax bills. Officials believe he owes £3million in tax. A spokesperson for Barrowman previously said that all schemes promoted by Knox companies complied with all relevant tax laws and that there was no wrongdoing.
Prince Charles’ charitable ventures are under scrutiny from their donors after the Sunday time revealed that cash donations totaling around £2.5million had been made to the Prince of Wales Charitable Foundation. The Charity Commission said last month it had no concerns about the governance of the charity and was not launching an investigation.
Barrowman’s charity was founded in February 2017 and was funded by loans totaling around £1.46million.
The Knox group of companies, which manages assets of around £3bn, is headquartered at Knox House in Douglas on the Isle of Man. The group included operations under the AML banner that promoted worker tax avoidance schemes between 2009 and 2015, under which workers were paid in the form of loans that were never intended to be repaid. The government cracked down on these arrangements – known as disguised compensation plans – in the 2016 budget, introducing a retrospective “loan charge” that taxes the payments as income.
The Prince’s Trust’s decision to make the Barrowman Foundation a platinum donor has been criticized. Carol Monaghan, SNP MP and member of the All-Party Parliamentary Caucus on Costs of Borrowing and Taxpayer Fairness, said it was ‘not appropriate’ for Barrowman to be a platinum patron of the Prince’s Trust. She added: ‘The greatest injustice in the whole loan fee scandal is that people who followed and followed professional advice are being hit with life-ruining bills, while those who have won huge sums of money promoting these programs have not been asked to pay a penny of the disputed tax.
The Barrowman Foundation said the trustees had not been contacted by the Charity Commission about any cases. A spokesperson said: ‘The charity has complied with all relevant accounting rules and Charity Commission lending guidelines. The loans were settled in 2021 and this will be reflected in the accounts due to be filed soon. No tax benefit was derived or obtained from the loans or any other contribution to the charity.
A spokesperson for The Prince’s Trust said: “We have not received any funds from Mr Barrowman since February 2019 and do not intend to accept any further donations.”