The Upper Tribunal has ordered the Charity Commission to withdraw its existing guidance on public benefit of fee-charging charities while it writes its new guidance.

The Tribunal, comprising the original team of judges that heard the Independent Schools Council’s case against the Commission, was asked by the ISC two weeks ago to declare whether the intention of its initial judgment was that the existing guidance should be totally quashed, or simply reworded, as the Commission contended.

But the Tribunal decided that simply rewriting the guidance would be confusing for trustees.  They said that their original 116-page judgment on the case “does not give the detail necessary to tell trustees what they need to do to be able to ignore one sentence or another of guidance which has not been quashed”.

And they added that because the law imposes upon trustees a statutory obligation to have regard to the guidance and to make a statement in their annual report about whether they have done so, it is “unsatisfactory” that they should have to consider guidance which has been found to be flawed.

So in their order, published on Friday, the Tribunal said it would use its powers to quash the guidance unless the Commission withdraws it. It gave the regulator seven days to decide whether or not to withdraw the offending parts of the guidance and 21 days after the date it agrees to withdraw it, to do so.  The Commission told civilsociety.co.uk that it would withdraw the guidance.

The parts that are to be withdrawn include the whole of the section on fee-charging charities and key parts of the general public benefit guidance.

However, in its latest decision, the Tribunal judges stressed that the Charity Commission had not acted unlawfully in coming up with the guidance it did.  It said: "This case is of course … not a case in which illegality has been shown or in which the Charity Commission has taken an unlawful action or promulgated an unlawful decision.  

“What has happened is that… it has issued guidance based on a very detailed analysis of the complex and difficult case law relating to public benefit and following thorough consultation. We have decided that limited parts of the guidance are wrong or obscure.”

Commission still considering an appeal

But this may not yet be the end of the matter. The Charity Commission has applied for an extension of time that the parties can apply for permission to appeal the Tribunal's judgment on the original Attorney General’s reference and the judicial review application.

The extension sought is until 21 days after the date of this latest decision – so 23 December.  The Tribunal has granted the extension.  The Commission said it has not yet decided whether to appeal.