‘In a recent case of Kenya Aid Programme versus Sheffield City Council, the High Court allowed an appeal by a charity against an order to pay business rates in respect of the use of warehouse premises’, comments Peter Greig, Manager of Valuation Services Department for Goadsby.
Charities are entitled to mandatory business rates relief if the property they occupy is used wholly or mainly for charitable purposes. In this case the Charity had taken a lease of 2 warehouse units to store office furniture. A mutually beneficial arrangement with the landlord had been entered into in order to mitigate business rates liability, resulting in the Charity paying a peppercorn rent and being responsible for business rates payments and the landlord would, in return, pay as a donation to the Charity an amount equal to the rates payable.
A Court hearing resulted in the presiding District Judge not being able to conclude whether the premises were being used wholly or mainly for charitable purposes, but found in favour of the Local Authority and ordered the Charity to pay a sum in excess of £1.6 million. The Charity subsequently appealed, with the hearing being taken to the High Court, who agreed that the original decision was flawed and should be re-considered. It was found in the High Court that it was correct to focus on the extent to which the premises were being used by the Charity, but incorrect to consider that it was necessary for the Charity to occupy two premises and whether it used the space efficiently.
This case clarifies how the tests for mandatory charity relief from business rates should be applied. The decision will be of particular interest to charities, landlords and Local Authorities who are considering, or are involved in, such arrangements.
