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Charity Non-Domestic Rates Ruling

Published: 23 January 2013, in categories: Legal Updates | Commercial Property Updates | News and Updates

Charity Non-Domestic Rates Ruling

A local authority has suffered a setback in its attempt to make an international aid charity occupying two very large warehouses in its area pay more than £1.6 million in non-domestic rates.

The court ruled that a district judge had taken irrelevant factors into account before issuing liability orders against the charity.

Kenya Aid Programme (KAP) occupies Units 1 and 2, Europa Way, Sheffield - which together have a floor area of more than 116,000 square metres – at a peppercorn rent and receives substantial annual donations from its landlord.  Sheffield City Council issued rate demands for the year ended March 31 2012 but KAP insisted that, as a registered charity, it was entitled to 80% relief from those sums by virtue of section 43(6) of the Local Government Finance Act 1988. The charity is reimbursed the remaining 20% by its landlord.

The council’s arguments were upheld by a district judge who rejected KAP's plea that the warehouses were used ‘wholly or mainly’ for charitable purposes. Describing KAP's arrangement with its landlord as ‘a match made in heaven’, the judge pointed out that, if the warehouses were left empty instead of being occupied by a charity, 100% of the rates would be payable by the landlord. He also found that the warehouses were being under-used for the ‘inefficient’ storage of furniture and that KAP's reasonable needs could have been met by occupying just one of them.

Allowing KAP’s appeal and overturning the judge’s ‘flawed’ decision, the High Court ruled that, although he was entitled to look at the whole of the evidence and to consider the extent to which the premises were used, he had wrongly taken account of other factors. The efficiency, or otherwise, of the furniture storage use of the two warehouses was irrelevant, as was the reasonableness of KAP's occupation of both of them. The case was remitted for reconsideration by the district judge in the light of the High Court's ruling.

 

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