A case that could have seen NHS trusts receive £1.5bn in backdated business rate refunds has been rejected by the High Court.
The High Court has ruled that NHS Trusts and Foundation Trusts may not be treated as charities and therefore are not eligible for business rates relief. The ruling said that “if every foundation trust in the country were to claim repayment of the rates it had paid in the last six years, the sums involved would be very significant.”
Derby Teaching Hospitals NHS Foundation Trust had led a group of 17 trusts in their claim that they should be treated as charities.
A group of 45 local authorities, including Derby City Council, defended the claim for a rebate dating back to 2010.
Private hospitals registered as charities can apply to receive an 80 per cent rebate, but the NHS has to pay business rates on its properties.
Mr Justice Morgan said they were not established for charitable purposes only.
The defendants also referred to the guidance given by the Charity Commission in “The Independence of Charities from the State – RR7”. This "expressed the view that in order to be a charity a body needed to be independent of government and it must exist to carry out its charitable purposes and not for the purpose of implementing the policies of a governmental authority or of carrying out the directions of a governmental authority”.
The Charity Commission was an "intervener" in the case and therefore not acting for either side. It advised the court on charity law, but said the ruling was a “welcome” decision.
Derby Teaching Hospitals NHS Foundation Trust, Derby City Council and the Commission all filed short witness statements.
'This was a significant case: charity has a distinct status in law'
A Commission spokeswoman said: “We welcome the considered judgment from the High Court, which makes clear that foundation trusts do not fall within the scope of charity. It was important for the Commission, as regulator and registrar of charities in England and Wales, to have lent our expertise and experience to the Court throughout the proceedings.
“This was a significant case: charity has a distinct status in law, and it also has a special meaning in the eyes of the public. It is crucial that this special status is protected for the benefit of the public.”
The Commission recently won its first contempt of court case, after the court found that trustees withheld evidence needed by the regulator.