Charity Commission advises High Court on NHS trusts' £2.4bn business rates dispute

The NHS wants trusts to be treated as charities and thus qualify for mandatory business rates relief

High Court
High Court

The Charity Commission is providing advice to a High Court dispute between 19 NHS trusts and 47 councils over £2.4bn of business rates.

The dispute centres on NHS demands for trusts to be treated as charities in order to qualify for mandatory business rates relief.

The case has been brought by Derby Teaching Hospitals Foundation Trust and will be heard at the High Court from 4 November, with the commission providing guidance on charity law in the preliminary hearing.

If the NHS case is successful, the trusts would be entitled to an 80 per cent discount on business rates, in line with the rates charities pay under existing legislation.

The NHS has asked for this to be backdated to 2010, which would have netted the trusts a combined £1.5bn when the case first emerged in 2016.

The three-year delay in reaching court means the figure has since grown to £2.35bn.

The NHS is expected to pay £408m in business rates in the 2019/20 financial year if the court rules against the 19 trusts.

A spokesman for the Local Government Association said: "The LGA is supporting member councils that have received applications for mandatory relief from business rates on behalf of a number of NHS trusts and are working with them to consider the appropriate response.

"We have sought legal advice from counsel. We believe that NHS trusts and foundation trusts are not charities, and that the applications for rate relief are therefore unfounded."

A spokeswoman for the Charity Commission said the regulator would be providing assistance to the court in interpreting charity law for the purpose of helping the court reach a decision on the legal status of NHS trusts.

"We consider it vital that the court, in making a decision in this case, is fully aware of current law, procedure and practice applicable to charitable status in England and Wales, and is mindful of the potential consequences of changes to the principles that determine those boundaries," the spokeswoman said.

"As the registrar and regulator of charities in England and Wales, the Charity Commission is in a unique position to offer the court our expertise and experience in this area."

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