The managing director of the UK’s largest leisure operator has called for an investigation into ‘sham’ leisure trusts, which he says are abusing charitable status to benefit from tax relief.

Mark Sesnan, whose company GLL holds trust status and operates more than 200 public sport and leisure centres nationwide, said such companies are exploiting tax breaks to benefit their shareholders.

As a trust, companies can be entitled to a range of tax reliefs and business rate reductions, as well as being eligible for a number of grants. Advocates say that the financial advantages that trusts can offer to local authority partners are essential in the age of zero-subsidy management contracts.

Speaking in the latest edition of Health Club Management, Sesnan didn’t specify which companies he feels are guilty of abusing trust status, but called for more scrutiny of the ‘growing’ issue.

“Our competitors currently fall into three groups: private sector companies, leisure trusts and what I’d call ‘sham’ trusts – private companies that have established trusts as vehicles for their shareholders to benefit from tax relief,” said Sesnan.

“This is an area that has grown recently and needs to be investigated. These ‘sham’ trusts aren’t really charitable, but are benefiting from the same tax breaks created to support genuine not-for-profit organisations.”

Sesnan’s comments came in a feature exploring the growth of ‘mega-trusts’ and how they are impacting on local leisure provision. The past couple of years have seen the emergence of several ‘mega-trusts’ that have grown rapidly to operate more than 100-sites each nationwide. The resultant economies of scale and stronger balance sheets have made it tougher for smaller trusts to compete for tenders, with many opting to ‘merge’ with their larger rivals for the sake of survival.