January, 2024
As a registered charity, The You Trust should be entitled to a mandatory 80% charitable rate relief, however as they were occupying the space jointly with their trading subsidiary who are a limited company and not a charity, Fareham Borough Council were charging them business rates at the full rate.
Having tried unsuccessfully to resolve this with both FBC and the VOA, The You Trust instructed Hellier Langston to look into the situation on their behalf.
Hellier Langston advised from the outset that the crux of the case lay not with the VOA who set the value of the premises for business rates, but with the local authority, FBC, who deal with the payment of business rates and the correct interpretation of the relevant statute and case law.
In order to benefit from the mandatory exemption from business rates it is important to understand the meaning of ‘wholly or mainly used for charitable purposes’. Case law suggests that ‘mainly’ probably means ‘more than half’; but there is a certain amount of ambiguity about this and the interpretation may vary from local authority to local authority, with some arguing that ‘mainly’ in fact means more than 75 per cent.
The use of the space also has a bearing and whilst a head office or property used for management and administration would be sufficient to qualify, a property carrying on business to earn money for a charity would not – this specifically excludes trading subsidiaries such as My Learning Cloud Ltd.
To complicate matters further, where parts of premises are occupied by both the charity itself and a trading subsidiary, only the part occupied by the charity qualifies for mandatory relief, although in practice some local authorities accept an argument that the charity is occupying the whole premises and using them mainly for charitable purposes.
Having put the case to Fareham, dealing with all of these points, Fareham agreed with Hellier Langston’s position and granted the full 80% mandatory relief, resulting in a substantial rebate for the client.