Non-domestic rates – Occupation for charitable purposes – Local Government Finance Act 1988 – Respondent charity having licence to occupy or sublet commercial units for charitable purposes only – Most of units remaining unoccupied – Appellant rating authority demanding unoccupied rates in respect of units – Liability orders refused – Whether units attracting charitable exemption from rates under section 45A(2) of 1988 Act – Whether that exemption applying only where hereditament next to be occupied by ratepayer itself for charitable purposes – Whether prospective occupation by sub-licensees sufficing – Appeal dismissed
The respondent was a charity with the objects of promoting the welfare of offenders and former offenders, persons suffering from a disability and those in social or economic deprivation. In March 2011, the owner of a substantial former mill building, which had been divided into commercial units, granted a licence to the respondent to use and occupy some of the units for charitable purposes only. The licence applied only to those units with a rateable value in excess of £2,600, that being the value above which the units would attract liability for unoccupied rates. The licence was expressed to be personal to the respondent, although the respondent could “sublet” provided that the sub-licensees also used the sub-licensed parts for charitable services. The units for the most part remained unoccupied, although the respondent sub-licensed one unit to another charity for use as a charity shop.
The appellant council issued demands on the respondent for unoccupied rates in respect of eight of the units for 2011 to 2012. The rates were not paid and the appellant applied to the magistrates’ court, under the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989 for liability orders in respect of those demands.
The magistrates refused the orders. They held that the units were exempted from unoccupied rates, by virtue of section 45A(2) of the Local Government Finance Act 1988, since the ratepayer was a charity and it appeared that, when next in use, the hereditament would be “wholly or mainly used for charitable purposes (whether of that charity or of that and other charities)”, within the meaning of section 45A(2). Although they found that the respondent did not itself intend to occupy any of the units, they considered that the requirements of section 45A(2) were met in the light of the restriction on the use to which sub-licensees could put the property.
The appellant appealed. It contended that a property would be zero-rated under section 45A(2) only if it appeared that, when next in use, the property would be occupied and used by the owning charity itself; occupation by other charities as sub-licensees would not suffice.
Held: The appeal was dismissed.
The rating regimes for occupied properties and for unoccupied properties were markedly different. When considering liability for non-business rates in respect of occupied properties, the focus was on occupation; by contrast, the focus for unoccupied properties was on ownership. On the ordinary meaning of the words used, section 45A(2) did not require that, when next in use, the hereditament had to be wholly or mainly used by the ratepayer charity. Had parliament intended to zero-rate unoccupied property only if the next occupier were the currently-owning charity, then it could and would have made that clear. Nothing in the scheme or context required the ordinary and clear meaning of section 45A(2) to be displaced with some other, artificial meaning requiring substantial distortion of the statutory words.
The charitable purposes of a charity were its objects. It was not sufficient, for the purposes of section 45A(2), that the next occupier would be a charity, regardless of its objects; the next use had to be for charitable purposes that included the specific charitable objects of the currently-owning charity. The bracketed words in section 45A(2) could have no other construction. However, the possibility of sub-licensee charities having charitable purposes entirely different from the wide objects of the respondent was not in issue before the magistrates.
Accordingly, the magistrates had correctly concluded that the respondent was exempted, pursuant to section 45A(2), from liability for the rates for which liability orders were sought, on the ground that the occupier or user of each of the relevant units would be charities other than the respondent.
Matthew Reed (instructed by the legal department of Preston City Council) appeared for the appellants; William Hanbury (instructed by the legal department of Oyston Angel Charity) appeared for the respondent.
Sally Dobson, barrister