An organisation that helps homeless people to find housing has been removed from the charity register after the Charity Commission discovered it had been providing benefit to a company owned by its founder.

Fresh Start Housing was founded in 2010 by Samir Patel and registered as a charity in 2011 with the objects of providing advice and assistance to homeless people, particularly ex-offenders.

It would refer people to a letting agency, Investing Solutions Limited, of which Patel is listed as the sole director and secretary with Companies House. Both organisations operate from the same address at Battersea in London, according to their websites.

The commission opened a monitoring case in November 2015 after the BBC reported that ISL had received £5.5m in housing benefit by housing single men referred to the company by FSH. The broadcaster alleged that FSH was effectively a conduit to make money for ISL, the commission’s report on its investigation said.

In a statement released yesterday, the commission said it had concluded that FSH “was not and had never been a charity”.

The statement said the commission had questioned trustees of FSH about its independence from ISL before allowing it to register as a charity in 2011 and was assured that FSH would refer prospective tenants to a range of housing agencies, not just ISL, and that the trustees were completely independent of the company.

Trustees also claimed that FSH would generate income by charging a fee to landlords and agents when it referred prospective tenants for housing, the commission statement said.

But the commission monitoring case report said that “most, if not all persons who sought the charity’s help (its beneficiaries) were referred to ISL to be housed, and ISL received a financial benefit from rents received”.

Most of the trustees had some form of business or personal relationship with Patel and, contrary to what the regulator had been told, FSH received no payments for referrals, the statement said.

The commission found there was an inherent conflict of interest with FSH, the statement said.

The regulator said it had informed HM Revenue & Customs of its decision to remove the organisation from the charities register and that it could decide whether to recover any financial benefits FSH might have received while registered as a charity.

A spokesman for FSH said: “Fresh Start’s original request for acceptance as a charity included the expectation that we would use several different landlords. In practice, only one landlord – Investing Solutions Ltd – would always offer accommodation to clients with no cash reserves beyond their jobseeker’s allowance. Virtually all other landlords within the inner-London area need about £2,000 for fees, for one month’s rent in advance and one month’s rent as deposit.”

He said FSH had “not used any of the advantages” of charitable status by soliciting donations or recovering VAT and had not challenged the commission’s decision because it was administratively easier not to operate as a charity.

He said HMRC had not contacted the organisation after the commission’s decision because there was nothing to recover.

The organisation was continuing its work to house people at risk of homelessness, he said.

No one from ISL responded to Third Sector’s request for comment before publication deadline.