A judge has ruled that the governing body of the Freemasons is not eligible for a VAT rebate on subscriptions paid by its members over more than 20 years.
The United Grand Lodge of England challenged a 2010 decision by HM Revenue & Customs not to grant it a VAT rebate likely to be worth millions of pounds for the period between 1973 and 1996.
Article 132 of the European Union's Principal VAT Directive provides exemptions from VAT for certain groups that have a religious, philosophical, philanthropic or civic nature, among others.
The UGLE argued that its activities met the criteria for exemption and brought a case in the First-Tier Tribunal’s tax chamber.
It also made contributions to other charities, citing £9m given to Help the Hospices since 1984.
In 2010, the combined spending of the four masonic charities was £82m, which the UGLE said was second only to the National Lottery in terms of charitable spending.
Of this sum, £20m was paid for the benefit of masons, £46m was paid to the dependants of masons and £17m for the benefit of people with no masonic connection, Judge Charles Hellier said in his judgment earlier this month.
A condition of Freemasonry is belief in a supreme being, but Judge Hellier said the organisation fell just short of being a religious organisation because no specific god was accepted by all its members.
Freemasonry also failed the test of exemption on philosophical grounds because its rules for living did not display sufficient public interest, the judge said.
Judge Hellier accepted that charity, through donations and time spent in the community, was an aim for the UGLE but found that much of its charitable spending was directed at fellow masons.
"The objects of Masonic contribution to the charities, and the UGLE’s administration of them, might display – at least to some extent – a principal purpose of benefiting fellow masons or the dependants of fellow masons and thus not to that extent indicate goodwill towards mankind in general, but to a particular subset of mankind," Judge Hellier said. "To the extent monies were paid with the hope or expectation of self-insurance, their payment does not seem to us to be an act of philanthropy."
Raymond Reed, a member of the UGLE’s Board of General Purposes, gave evidence to the court that Freemasonry had, since the 1960s, become more open and involved in the community.
But Judge Hellier concluded that only a small part of the UGLE’s aims were "civic in nature" and dismissed the appeal.
The judge said the UGLE had 56 days in which to mount an appeal against the decision.
The UGLE declined to comment on the judgment, citing the appeal period.