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The Courts have heard a significant number of cases recently regarding non-domestic rate liabilities and Nuffield Health v London Borough of Merton [2021] EWCA Civ 826 is another of these, albeit that this one related to charitable rate relief, rather than to rates mitigation schemes.
Nuffield Health was a registered charity but operated a commercial gym and fitness centre at Merton Abbey. Nuffield claimed that, as a registered charity, it was entitled to the mandatory 80% charitable rate relief allowed under the Local Government Finance Act 1988. The London Borough of Merton appealed against an order made by the High Court with regard to the issue of whether or not Nuffield Health was entitled to mandatory relief from non-domestic rates in respect of its occupation of a gym in London under section 43(6)(a) of the Local Government Finance Act 1988 which applies where: “the ratepayer is a charity or trustees of a charity and the hereditament is wholly or mainly used for charitable purposes (whether of that charity or of that and other charities)”. The relief represents 80% of the rates otherwise payable in respect of the premises. The rateable value of the gym was £565,000. The claim had been heard by a High Court judge in January 2020. He made a declaration that Nuffield Health is, and has at all times since 1 August 2016, been entitled, pursuant to section 43(6)(a) of the 1988 Act, to mandatory relief from non-domestic rates in respect of the premises. He ordered the repayment of rates for which relief should have been given, amounting to £930,823.95, together with interest.
On appeal to the Court of Appeal, Merton alleged that because the gym was operated as a commercial enterprise, it was not entitled to charitable rate relief. Nuffield argued that it was a registered charity, and one of its charitable purposes was improving public health in England, which entitled it to charitable rate relief for the property.
By a majority judgment, the Court of Appeal found that Nuffield was entitled to charitable rate relief, because it was a registered charity and because the property was occupied for one of its charitable purposes. We understand that Merton is seeking leave to appeal to the Supreme Court.
The majority judgment in this case offers a detailed, but relatively orthodox, interpretation of the provisions relating to charitable rate relief, which is that if the two conditions, that the ratepayer is a charity, and that the hereditament is wholly or mainly used for charitable purposes, apply, then the rate relief should also apply. The dissenting judgment, of Lord Justice David Richards, took a slightly different view in considering that use for charitable purposes included a “public benefit” test, that was not satisfied by the ratepayer in this case. If the matter proceeds further to the Supreme Court, this could be part of any grounds of appeal, which could be a matter to exercise the minds of the trustees of registered charities claiming charitable rate relief.
