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Solicitor Derek Tughan who converted two property businesses into charities could now be hit with £25m tax bill

By Allan Preston

Published 15/06/2016

Derek Tughan is facing huge bill
Derek Tughan is facing huge bill

A businessman from Co Down could face a tax bill of up to £25m after converting two property companies into charities.

Solicitor Derek Tughan (74) had been overseeing a property empire worth £15m, but has now been dropped as a trustee of the two charities.

The Charity Commission, which monitors the financial behaviour of charities, said Mr Tughan must pay back three decades worth of tax.

Mr Tughan has said he will fight the decision calling it "state-sponsored theft".

He had first inherited two rental companies - Bangor Provident Trust and Victoria Housing Estates - set up by his late father Fred in the 1950s.

The companies were changed into charities by Mr Tughan in the 1980s. By that time the property portfolio included nearly 500 houses and apartments.

Mr Tughan explained: "In 1985-1986, we got advice that if we changed our rule books to another standard that we would not have to pay tax and that is what we did. On our taxable revenues we paid no tax, nor did we pay any capital gains tax on any properties that we happened to sell."

Mr Tughan added: "They have grabbed control of Tughan family property and I regard it as state-sponsored theft. I am not a charity."

This has been rejected outright by charity expert Roger Courtney.

He said they were "absolutely, definitely charities. We went to the High Court which confirmed they are definitely charities".

Mr Courtney said that charity rules stated that assets were locked and directors and trustees could not individually benefit.

He added that the commission had identified assets transferred out of the charities for private use which they would now seek to recoup. Some commentators have shown a lack of sympathy for Mr Tughan.

The financial broadcaster Paul Lewis said on Twitter: "Owner calls property businesses charities to avoid tax. Charity Commission closes them down. He calls it 'theft'."

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