Reports on Beautiful Ideas Company referred to Taxman

The Council has conducted two internal audit reports into the work of the Beautiful Ideas Company. BUT there is no report to say whether or not the Council has learned any lessons from this waste of money so that mistakes will not be repeated.

Having finally received them I have passed the released reports on the Beautiful Ideas Company to the tax office following revelations that copious amounts of cash were taken from football punters for matchday parking which was not properly accounted for.

Copious amounts of money appear to have been taken and not properly accounted for but that even more might just have disappeared. People who took the money in buckets or who provided security had been paid cash in hand and should be made to pay any tax liability they might have accrued as should the Flanagan Group who were the company behind the scheme.

But we have been unable to tell from this report just how much money was taken and was not accounted for as there was no proper ticketing system in place, no audit of usage and no accounting of who got free places.

HMRC should examine the tax returns of all people who worked on the scheme and look at the company accounts of the Flanagan Group to see what should have been paid.

I also criticised the delay in publishing the reports. In my view a redacted version of the report should have been issued when both reports were completed. I said this at the time and have continually pressed for the report to be published since. To add insult to injury the Council published the report that they were instructed to by the Information Commissioners at the last moment to avoid legal action.

The critique and recommendations of the two audit reports fell into two categories:

Running the business properly

  • The BIC should ensure that they promptly report any changes to their business rates status immediately following a change in circumstances.
  • BIC should introduce formal records, which evidence the amount of pay and expenses paid to each member of staff. Payments should not be made in cash from match day takings.
  • The BIC should obtain sufficient information from each attendant to confirm that they satisfy the HMRC’s conditions of being self-employed.
  • BIC should register for VAT with the HMRC, account for VAT on is activities and make the appropriate payment to the HMRC. Information should be supplied to customers about the car park’s VAT status.
  • BIC should introduce processes that demonstrate all match day income has been collected. This could take the form of numbered tickets, or independent audit checks. Records should be retained to demonstrate that appropriate checks have been undertaken.

2.           Investing the money properly

  • The investment process required that organisations applied on a form expressing an interest in receiving money from the fund.
  • Successful applicants were subsequently invited to ‘pitch’ their ideas in a ‘Dragon’s Den’ type of environment to the BICo Board.
  • There was paperwork provided in terms of applications and loan agreements however the records relating to the scoring of pitch events are insufficient as there is no paper audit trail of how awarded companies were chosen over the others.
  • Companies with same directorship as BICo were provided investment funds and a BICo director may have been present when the pitch took place AND/OR when the decision was made in contravention of the BICo’s internal governance procedures.
  • Possible poor investment decisions relating to financially unstable companies including companies no longer trading and therefore unable to provide monetary repayment of any kind.
  • A number of Investments/loans made to companies whose director is also a Director of the BICo.
  • Of the sixteen companies/organisation awarded funding thirteen are still going in 2019 (although there was limited information available on three of these) three have subsequently been wound up.

What has the Council learn from this debacle? I do not know because a committee or Cabinet Member does not appear to have officially looked at the report, I can trace no recommendations about how the methodology can be improved to ensure that similar problems will not arise.

All this underlines how wasteful the Joe Anderson years were in Liverpool and the fact that a small group of crony councillors, mates and companies seem to have benefitted the most.

However, we must throw the baby out with the bath water. The concept of combining assets of the Council which are only partly used with volunteer initiative who can add value to the council’s work are legion. Look at the splendid work being done in Walton Hall Park and Calderstones Park by the Park Friends Groups. Look at how Friends of Libraries provide actions which add to basic library services.

To make these work there are some simple things that need putting in place:

  • A clear understanding of the services to be provided
  • A simple contract which outlines the responsibilities of the two (or more parties)
  • Clear rules about who can and cannot benefit from the relationship to ensure absolute probity in the use of cash and other resources.
  • Regular report backs to the council and community about what is happening
  • Clear accounting for all money and a clear audit trail for both income and expenditure.

Some of these rules can be quite simple if we are taking about small resources of cash and capital. However, when you start talking about up to £1 million as appears to eb the case with BICo the safeguards and checks need to be ramped up.

What has happened with the BICo is a mystery to me. How could the Council enter such loose arrangements with an organisation like this? How could the councillors involved in this in its initial stages, not have realised the need to have due processes in place. The answer to this is obvious as they could not ensure due process in the council’s activities either.

I want to see the Cabinet Member for finance now taking these reports into the public system and publicly agree on what might or might not be done to ensure that there is no repetition of the problem. Unless we do this and change our systems BICo will not be the last poorly run operation which wastes public sector cash and opportunities.

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About richardkemp

Leader of the Liberal Democrats in Liverpool. Deputy Chair and Lib Dem Spokesperson on the LGA Community Wellbeing Board. Married to the lovely Cllr Erica Kemp CBE with three children and four grandchildren.
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1 Response to Reports on Beautiful Ideas Company referred to Taxman

  1. Bill McGarry says:

    WITHOUT PREJUDICE

    Well some useful but somewhat limited result at long last.

    I took up the mantle regarding the Beautiful Ideas Company (North) over questions over accountability some 7 years ago as a vice chair of an Area based Forum in the area directly involved in Anfield

    My intention being to come up with projects directly benefitting the Anfield area who had been subject to so much disturbance as a result of the numerous regeneration plans and programmes involving the Council and other agencies such as Arena Housing.

    Also relevant in the context of this housing association was according to some the issue of the Affordable Housing Development Company. The issue of commercial confidentiality has proved a stumbling block in obtaining information on the serious questions over this company and its operations in the Anfield area.

    I had directly put questions on the on the operation of Beautiful Ideas (north) but didn’t really get very far at the Cunard Building all those years ago

    Now that we know there are still serious questions still lingering regarding Beautiful Ideas Company (North) operations it would be useful to know just who was responsible for signing off projects etc

    The board and individual members of Beautiful Ideas North also included several members who were also adjoined to other organisations. It is also perhaps worth noting that Arena Housing Association was one of them. Arenas representative i believe according to companies House records was a Mr David Litherland as a director of Beautiful Ideas North.

    Unless im mistaken but of course do check companies house for any further information

    See Councillor Kemps various recommendations including that

    BIC should introduce formal records, which evidence the amount of pay and expenses paid to each member of staff. Payments should not be made in cash from match day takings.

    BEAUTIFUL IDEAS COMPANY (NORTH) CIC, L8 3TX
    https://www.companiesintheuk.co.uk › ltd › beautiful-idea…

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