Judicial Review – Charitable Rates Relief

United Kingdom

The Court of Session has overturned the decision by Aberdeen City Council (“ACC”) to refuse charitable business rates relief and reaffirmed that, for the purpose of determining whether property is ‘wholly or mainly’ used for charitable purposes, “the mere fact that a property is not at all times in active use or even for most of the time... does not mean that section 4(2) of the 1962 Act cannot be satisfied.”

Background

The Petitioner, Centric Community Projects Limited (“CCPL”), is a registered charity in England and Wales, as well as in Scotland. CCPL lease a three-floor office block, formerly occupied by an oil and gas company, in Aberdeen and advertises, and makes available, the space at the property to charities and community interest groups. On 11 July 2018 CCPL notified ACC, the relevant rating authority, by way of an application for charitable rates relief, that “the property is occupied by a charity and is wholly or mainly used for charitable purposes.”

In terms of section 4(2) of the 1962 Act, where a rating authority receives notice of lands/property being occupied “wholly or mainly” for charitable purposes then, subject to the terms of section 4 of the act, any rates levied shall not exceed one-fifth of that which would otherwise be payable.

Following an inspection on 21 November 2018 by ACC, CCPL were advised in an email dated 27 November 2018 that, having had the opportunity to view the property and speak with the onsite staff, ACC disagreed that the property was wholly or mainly used for charitable purposes and therefore charitable relief would not be awarded.

Judicial review of the decision by ACC was sought by CCPL.

Decision

The Outer House of the Court of Session overturned the decision by ACC having found (1) that the decision reached by ACC was not within the statutory requirements of section 4(2) of the 1962 Act, and (2) that ACC had not taken due account of the circumstances including the active use made of the property as a whole and therefore had not given proper “context to the expression ‘wholly used’”.

The judgment reaffirms that the correct approach to section 4(2) of the 1962 Act is as set out by the Lord Ordinary in English Speaking Union Scottish Branches Educational Fund v City of Edinburgh Council in which it was found that “in applying section 4(2) a committee… is obliged to give context to the full expression ‘wholly used’ in relation to the use actually made of the building as a whole” and not whether the property is solely used for that purpose.

Lord Bannatyne’s decision includes a helpful summary of the law on this matter and is a reminder that “the mere fact that a property is not at all times in active use or even for most of the time... does not mean that section 4(2) cannot be satisfied.”

The full judgement is available here.