An aid charity must pay £3.27m of business rates on two warehouses it used for storage, a district judge in Sheffield ruled today.
The Kenya Aid Programme, which has an income of £81,000, used two warehouses on Europa Way, Sheffield, to store furniture it planned to send abroad to Kenya, and claimed 80 per cent mandatory charitable rate relief. The landlord, who would be liable for the full amount of the business rates if the charity was not in occupation, paid the remainder of the rates and also made a donation to the charity.
But District Judge Browne, sitting in Sheffield Magistrates’ Court, ruled that the charity was not using the properties "wholly or mainly" for charitable purposes and therefore was not entitled to claim charitable rate relief, and granted a liability order to Sheffield City Council.
The judge made a liability order in favour of Sheffield City Council in October 2011. However, the charity appealed to the High Court, which ruled in January this year that the decision was "flawed" and ordered the judge to look at the decision again.
In a fresh ruling, the judge found that evidence from witnesses and photographs "would support a use of the units not exceeding 50 per cent" and that therefore the property was "mainly unused". He made a fresh liability order in the council’s favour, granting it £1.76m for one building and £1.51m for the other, covering a period from 2010 to 2014.
Maurice Smith, chief executive of the Kenya Aid Programme, told Third Sector that he was very disappointed with the judgment and was considering the legal position.
The Charity Commission announced it had opened a statutory inquiry into the Kenya Aid Programme in April 2012 to examine regulatory concerns about potentially significant financial loss to the charity and "serious governance failures".