Nuffield Health has defended its charitable status, after an American private healthcare company publicly called on the UK government to change the tax system for fee-charging healthcare charities.
HCA, which runs six private hospitals in London, stated that it pays £75m in tax but said it would pay £50m less if it was a charity. Keith Briddlestone, commercial director said: “The issue for us is that they can be more competitive on price.”
He suggested that the change to the tax system would be “relatively painless”. The Competition Commission is currently investigating the private healthcare sector.
This year it commissioned Cass Business School to examine the tax benefits of being a charity. The report, which has not yet been published, looks at the tax reliefs that four healthcare charities receive. These charities were the Hospital of St John & Elizabeth, King Edward VII Sister Agnes, the London Clinic and Nuffield Health.
The report points out that: “Although there is some debate about the public benefit status of large, highly commercial, fee-charging charities, we note that in general terms the tax policy makers show little sign of discontent with the status quo on the grounds that charities do not operate to earn profits for their shareholders and investors and where they do make profits, it is only to re-invest in more work for their causes and for public benefit.”
Nuffield Health is the UK’s largest charity, it held onto the top spot in civilsociety.co.uk’s Charity 100 Index in 2012, and has an income of £560m. Its chief executive is paid £850,000.
In a statement it said it carries out a range of things to prevent ill health through its health and wellbeing centres, including free health checks and public health sessions.
It criticised the motivation of the report’s commissioners: “The report from the Hospital Corporation of America seems to be trying to insinuate that UK charities like Nuffield Health put less back into society than for-profit corporations like themselves. Everything we do at Nuffield Health is designed to improve the health of the UK population. This means, like every other charity in the UK, we operate under a separate tax regime than global for-profit organisations who exist solely to provide a return to their shareholders.”
The public benefit of fee-charging health charities was also questioned by former charities minister and Labour MP, Fiona Mactaggart, who said: “I think it's a great pity that, because of feeble regulation by the Charity Commission, we are giving a significant bung from the taxpayer to organisations that appear to have few or, in some cases, none of what most of us would consider to be the usual characteristics of a charity.”
A Charity Commission spokeswoman confirmed that it had “no broad concerns” about the public benefit provided by healthcare charities.
The Commission added: "If Parliament wishes to redefine the public benefit requirement, the Commission will regulate against any changes to the law which are made. Any concerns about the tax benefits that charities receive are points to be made HRMC. The Commission has no involvement in tax exemptions for charities."
In 2012 a tribunal ruling said that it was for the trustees of fee-charging charities – not the Commission or the courts – to decide how much assistance should be provided to those unable to afford their fees in order to satisfy the public benefit test.
