Landlords and charities will be breathing a sigh of relief after the Supreme Court on Wednesday ruled in favour of registered charity Nuffield Health in a test case legal battle over charitable business rates relief.
Nuffield Health operated a commercial gym and fitness centre at Merton Abbey in London. It claimed that, as a registered charity, it is entitled to the mandatory 80% charitable rate relief allowed under the Local Government Finance Act 1988. The London Borough of Merton appealed this, claiming the gym was operated as a commercial enterprise.
A claim was first heard by a High Court judge in January 2020 with the judge ruling that at all times since 1 August 2016 Nuffield was entitled to mandatory relief from non-domestic rates for the premises, which had a rateable value of £565,000, and ordering the repayment of rates for which relief should have been given, amounting to £930,823.95, together with interest.
The Supreme Court unanimously upheld the decision of the lower courts and found that Nuffield Health was entitled to 80% charitable rates relief.
Rebecca Campbell, partner in Real Estate Disputes at BCLP, said the decision brings welcome clarity for charities and property owners, in a climate where High Streets continue to struggle post-COVID. "Charity lets are an increasingly common feature of commercial property, with property owners seeking to reduce exposure to business rates. This decision helps to maintain the status quo and brings certainty for all parties.”
The case hinged on the interaction between rating law and charity law.
Campbell explained: "By law, in order to be a charity the organisation must provide a public benefit. The Supreme Court decision makes it clear that charitable status is final when deciding whether business rates relief will apply. It does not matter if the specific premises in question only had a token charitable provision for those on modest incomes, so long as the premises were being used for its charitable purpose. Nuffield Health's charitable purpose is to promote health and that's exactly what the gym at Merton was doing, even if it was charging members £80 per month.
"The Supreme Court has held that if a charity is using premises for its charitable purpose it will be entitled to mandatory relief from business rates. There is no place for a detailed examination of the public benefit from the specific premises."