GOVERNANCE arrangements for a new organisation which will provide tourism, leisure, culture and youth services in Monmouthshire are not being made for “tax avoidance” purposes, a legal expert has said.
The reassurance came after Cllr Mat Feakins (Conservative, Drybridge) asked if the council is confident HMRC would not ‘attack’ it due to the proposed set up of the new Alternative Delivery Model (ADM) possibly being perceived as a “tax avoidance scheme.”
Planned arrangements would see a new charity set up which would work alongside a trading company to provide the services.
The local authority must control all shares in the company and must also exercise effective day-to-day control over its affairs.
But at a Monmouthshire County Council audit committee meeting on Thursday, Cllr Feakins questioned why the organisation would be governed by a shared senior management team under the proposals.
Cllr Feakins said it made more sense for the charity and the trading company to have separate management teams.
He said: “From an outsider looking in it looks like a group structure and then if you looked at that as a group structure you’d say what’s the purpose of it and then it takes you straight back down the line of tax.
“I’m just throwing this out there to say that’s what it looks like from someone from the outside.
“It looks like this is something that has been set up specifically for tax.”
But Gayle Monk, of Anthony Collins Solicitors, said the structure of the new organisation was not being set up for tax purposes.
“The intention behind the two vehicles is to work in a way which is appropriate for the different services that would be delivered,” she said.
Ms Monk added the reasons for the set up were “unrelated to tax.”
“We absolutely are confident that this is not the intention behind this structure and that there are good reasons for setting this up that are not in relation to tax,” she added.
Councillors agreed to set up an ADM after budget pressures saw tourism, leisure, culture and youth services hit by council cuts over recent years, with the budget having been reduced from £6.5m in 2010 to £4.4m.
MCC says the new set-up will ensure these services are able to thrive and respond to current and future needs of the community.
Funding of £155,000 has been agreed to pay for the setting up of the ADM, while £388,000 has been set aside for the next five years.
The new model is expected to be enacted in the autumn.