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Charity Logistics faces High Court rates probe

Third Sector, 14 September 2005

The Corporation of London is preparing to issue a High Court action against Charity Logistics over a suspected legal loophole.

The court will determine if the support services outfit is entitled to claim rates relief on empty commercial properties that it leases on behalf of other charities for disaster recovery space.

The corporation is one of three local authorities that admit to having had concerns about the way Charity Logistics claims mandatory rates relief on such properties. The Office of the Deputy Prime Minister also said it was "observing the situation closely".

"There is a legal loophole that exists," said a spokesman for the ODPM.

Under the law, empty commercial properties are subject to 50 per cent of the rates due on occupied properties. But unoccupied premises leased by charities are subject to just 20 per cent of commercial rates so long as the next time the property is in use it is likely to be occupied by a charity.

According to the corporation, because Charity Logistics leases the properties on behalf of other charities as standby use - somewhere for them to move into if there is a fire or other crisis at their usual headquarters - there is a question mark over whether this constitutes "likely to be next occupied by a charity".

A spokesman for the Corporation of London said the council was likely to issue court proceedings "in the autumn, to clarify what is a grey area in rating law".

The London Borough of Hillingdon confirmed that it had queried the status of Charity Logistics with the Charity Commission. But, after consulting the commission, the council deemed it was "entitled to continue to receive the discount".

A spokesman for the City of Westminster said Charity Logistics had applied for mandatory relief on business rates for several properties, and the authority was reviewing its application.

Richard Fleming, chair at Charity Logistics, was confident that a "strong rebuttal" from his organisation would sway the court in its favour.

"The Corporation of London has taken two years to reject our application," he said. "We have provided this service to charities in 30 local authority areas for years, and since the London bombings we have been fairly inundated with calls."