Legal Update: Charity Commission refuses to register shooting club

Plus: Judicial review rejected, trustees warned about tax and a reminder that legal form matters over substance in VAT exemptions

Target shooting
Target shooting

Shooting club refusal

The Charity Commission has rejected an application from the Cambridgeshire Target Shooting Association to be registered as a charity. Although the application included evidence of the physical and mental benefits of target shooting, the commission was not satisfied that people who participated were healthier in body or mind than people who didn't. By contrast, in 2011, it registered for the first time a bridge club on the basis that the game promoted health. The club presented evidence that players had a lower risk of dementia than people who did not exercise their minds. The CTSA might appeal against the commission's decision.

Judicial review rejected

The High Court has refused a charity permission to apply for judicial review over the opening of a statutory inquiry by the Charity Commission. The Watch Tower Bible & Tract Society of Britain, the national body for Jehovah's Witnesses congregations, sought judicial review in order to narrow the scope of the inquiry. The charity was told there were effective remedies available to it through the charity tribunal, although the tribunal does not have the power to narrow the inquiry's scope. The court said there were no exceptional reasons to justify judicial review. A related tribunal case continues.

A warning about tax

The commission has published new guidance for charity trustees on tax reliefs and tax avoidance. Although it makes it clear that tax evasion, tax fraud and other abuses of the tax system are primarily matters for HMRC, the commission is clearly seeking to respond to criticism from the National Audit Office, MPs and sector leaders over its approach to investigating tax avoidance by the Cup Trust, and to the suggestion that it deferred to HMRC and took too narrow a view of its own remit. One part of the guidance has become unexpectedly topical: the assertion that paying for goods or services in cash constitutes tax fraud. Coupled with the new powers sought in the Protection of Charities Bill to remove trustees that are found by HMRC not to be "fit and proper" persons, the guidance is a concerted move by the commission to stop cases of charity tax avoidance falling between two regulatory stools.

VAT sporting exemption

The tax tribunal has rejected a claim by the independent school charity St Andrew's College, Bradfield, in Berkshire, for a refund of £427,166 in VAT charged on services supplied by two trading subsidiaries that managed its sports facilities. The tribunal ruled that in order to be eligible for the exemption, the subsidiaries' constitutions should have prohibited the distribution of profits unless it was to another not-for-profit body. It was irrelevant that the subsidiaries had entered into deeds of covenant requiring them to distribute their profits to their parent charity. The decision is a reminder that, for some VAT exemptions, legal form matters over substance.

This column is written by Adrian Pashley, charities editor at Thomson Reuters, Practical Law, on behalf of the Charity Law Association

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