Supreme Court to hand down judgment next week in mandatory business rate relief dispute between council and gym-operating charity

The Supreme Court will next week (7 June) hand down judgment on whether section 43(5) and (6)(a) of the Local Government Finance Act 1988 provides for a mandatory 80% relief from non-domestic rates on premises which are occupied by a charity and used wholly or mainly for charitable purposes.

At issue in particular in London Borough of Merton Council (Appellant) v Nuffield Health (Respondent) is whether Nuffield Health is entitled to this mandatory relief in respect of its occupation of its members-only gym at Merton Abbey.

Nuffield Health, which is a registered charity, acquired the gym at Merton Abbey when it bought the business of Virgin Active in 2016.

It applied to the London Borough of Merton for mandatory and discretionary relief for the premises, which has a rateable value of £565,000.

The council initially applied mandatory relief, but following a visit from council officers in November 2016, relief was withdrawn because of the membership fees. 

Following the visit, the council took the view that the premises were not wholly or mainly used for charitable purposes because the requirement for public benefit was not satisfied.

The High Court found in Nuffield Health's favour, holding that the charity is, and was at all times since 2016, entitled to the mandatory 80% relief from non-domestic rates in respect of the gym.

As a result, the High Court judge ordered the council to repay rates for which relief should have been given, amounting to £930,823.95, together with interest.

Lord Justice Lewison then gave permission for an appeal on the following four grounds:

1. The judge was wrong to hold that Nuffield Health was not required to show that the premises were being used for the public benefit, as an aspect of showing that the premises were being used wholly or mainly for its charitable purposes.
2. The judge failed to apply the correct standard of public benefit for Nuffield Health's use of the premises.
3. Even if he applied the correct standard, the judge erred in his evaluation of whether the public benefit requirement was satisfied.
4. The judge was wrong to conclude that the premises were not being used wholly or mainly for fundraising.

However, the Court of Appeal - by a majority - dismissed the council's appeal, leading Merton to appeal to the Supreme Court.

The case was heard by Lord Briggs, Lord Kitchin, Lord Sales, Lord Hamblen and Lord Leggatt over two days in early March.

Judgment is scheduled to be handed down on Wednesday next week (7 June).

Adam Carey