When considering the public benefit for the purposes of section 4 of the Charities Act 2011 it is necessary to look at a ratepayer’s activities as a whole and not just those carried on at any one particular site.
In London Borough of Merton Council v Nuffield Health [2023] UKSC 18 the Supreme Court has unanimously dismissed an appeal against the respondent’s entitlement to relief from business rates in respect of its members-only gym at Merton Abbey.
Section 43(5) and (6)(a) of the Local Government Finance Act 1988 provides for a mandatory 80% relief from business rates where two conditions are satisfied: (i) “the ratepayer is a charity or trustees for a charity” and (ii) the premises are “wholly or mainly used for charitable purposes”.
The respondent was a registered charity whose purposes were “to advance, promote and maintain health and healthcare of all descriptions and to prevent, relieve and cure sickness and ill health of any kind, all for the public benefit”.
It pursued those purposes through the provision of gym facilities, including the gym at Merton Abbey and the operation of private hospitals and clinics.
The facilities at Merton Abbey were mainly restricted to fee-paying gym members with limited services available to non-members.
The respondent claimed the mandatory relief from business rates under section 43 of the 1988 Act from 1 August 2016 when it acquired Merton Abbey gym from Virgin Active.
The council refused relief. It argued that because the membership fees were at a level which excluded persons of modest means from using the gym facilities, Merton Abbey gym was not used for charitable purposes as the requirement for public benefit under section 4 of the 2011 Act was not satisfied.
The respondent challenged the decision and succeeded both in the High Court and by a majority in the Court of Appeal.
The first condition of section 43 of the 1988 Act was satisfied. In considering whether the charity’s purposes are for the public benefit it is necessary to look at the ratepayer’s activities as a whole, not just those carried on at any one particular site.
While the services provided at the Merton Abbey gym did not by themselves satisfy section 4 of the 2011 Act, the respondent used Merton Abbey gym for the direct fulfilment of its charitable purpose of promoting health through exercise which served both rich and poor.
The provision of gym facilities to those who could afford membership fees was itself carried out as part of the public benefit requirement.
Louise Clark is a property law consultant and mediator
