When I first started to specialise in charity law I did not imagine that I would find the law on business rates enthralling. It will seem a dull subject to some, but it is actually a very important area for charity trustees to understand and take advice on where necessary. This is because the law regarding mandatory non-domestic rates relief for the taxation of premises owned or/or used by charities is complex.
In brief, charity ratepayers are granted a mandatory 80% relief from non-domestic rates where the property is wholly or mainly used for charitable purposes by that charity. It does not need to be a registered charity in order to claim the relief, but must be able to show that:
- it is established for charitable purposes for the public benefit; and
- that the premises are being used wholly or mainly for charitable purposes.
The case of Nuffield Health v London Borough of Merton  EWCA Civ 826 concerned Nuffield Health; a charity that runs nursing homes, hospitals, workplace health assessment facilities, medical centres and gyms. Its primary method of fundraising is to charge for its products and services. The local authority refused mandatory rate relief on one of the charity’s gyms on the basis that it was being used for fundraising activities and not being used wholly or mainly for charitable purposes.
The Court of Appeal decided in favour of Nuffield Health that the relief will apply because the charity was using the premises for a purpose "which is one of its charitable purposes" (e.g. to promote health) and helpfully made it clear that a charity, like Nuffield, that is carrying out trading which also fulfils its charitable purposes onsite should not be regarded as using the site for a purpose other than carrying out its charitable purposes.
The Court of Appeal held that: When assessing "public benefit" for the purposes of section 43(6)(a) of LGFA 1988, the focus was on the charity's overall activities and purposes, not on the activities at its individual sites. The section had a broad meaning that treated the charitable purpose, and therefore the public benefit requirement, as being subsumed in the status of the charity ratepayer. The relevant question was whether the charity was using the particular hereditament for its charitable purposes, not whether the activity carried on at that particular hereditament would qualify as a charitable activity in its own right. Local authorities therefore had only to enquire whether the charity was using the relevant premises for its specified charitable purposes; they did not need to satisfy themselves that a public benefit was being delivered at those premises.