Health charity wins tax relief legal battle over members' gym

A health charity’s bid to receive mandatory tax relief amid concerns around the affordability of one of its members' only gyms has been backed by the UK Supreme Court.

The decision is set to have implications for all charities operating services across a number of sites, according to legal experts.

Nuffield Health’s claim that it was entitled to 80% charity tax relief on non-domestic rates for the gym had been contested by the London Borough of Merton.

The council had been concerned that the gym did not meet the public benefit requirement of the tax relief, which for fee paying charities would usually include allowances such as discounted or free membership. Merton had claimed that the gym was unaffordable to local people with “modest means” and therefore was not entitled to the relief.

But the supreme court has backed an earlier High Court decision that it is the work of the charity as a whole which needs to be considered for this requirement, rather than each individual site.

The Supreme Court said: “Nuffield Health is a registered charity. Its essential purposes (ie what it is there for) include the advancement, promotion and maintenance of health. It fulfils those purposes in numerous hospitals, fitness and health centres and gyms.

“Those purposes are irrebuttably presumed all to be charitable, in all the places where they are carried on and, viewed overall, to satisfy the public benefit requirement.”

Legal views

“The judgment will bring comfort to charities who operate at various premises,” said Victoria Mahon de Palacios, a partner at law firm Wedlake Bell.

“Had the judgement gone the other way, such charities would now be needing to carefully review whether each of their sites meet the public benefit requirement under charity law so as to continue claiming rates relief on charity grounds.”

Nicola Evans, charities counsel at BDB Pitmans which acted for the charity said: "The judgment should be helpful for charities and rating authorities alike in setting out a clear test to apply for mandatory charity rates relief, in line with (as the judgment states) the ‘statutory objective of providing a generally simple, predictable and consistent answer to the question whether a charity ratepayer should have relief from business rates’.

"Beyond the area of rates relief, the Supreme Court’s statements on certain principles of public benefit should also be of interest and offer some practical reassurance for charities operating across multiple sites."

Nuffield Health operates more than 200 gyms and health assessment facilities, as well as 112 fitness and wellbeing centres and 31 hospitals.

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