Why are some charities liable to payment of rates, while others are not? What determines liability? Has anything changed?
What are the criteria for general charity exemption?
A building occupied by a charitable organisation:
- exclusively for charitable purposes and
- not for private profit.
is exempt from rates.
Does this mean that a Revenue CHY (or CRA) Number entitles a charity to rates exemption?
Not necessarily. The meaning of the terms "charitable organisation" and "charitable purposes" have been narrowly construed for rates.
So what has changed?
Firstly, recent decisions of the Valuation Tribunal acknowledge that much of the case law prior to the Valuation Act 2001 may no longer be relevant. Those decisions were based on the interpretation of earlier legislation which has now been repealed and replaced by the Valuation Act 2001. This means that a wider meaning of charitable purposes may now be possible.
Have there been more recent changes?
Yes. The Valuation Act 2015 came into effect on 8 June. This now adopts the definition of "charitable organisation" in the Charities Act 2009. Accordingly, a charity registered with the Charities Regulatory Authority ("CRA") may now be recognised as a charitable organisation for the purposes of exemption from rates. Additionally, this opens the possibility that the definition of charitable purposes in the Charities Act 2009 may now become of relevance.
What does this mean?
If the Valuation Tribunal adopts this interpretation then, it is arguable that the criteria applied by the Revenue Commissioners in granting charity numbers would also be relevant for exemption from rates.
For exemption from rates, is it necessary for a charity to show public benefit?
Yes. The advancement of religion is presumed to be of public benefit as would relief of poverty/economic hardship and advancement of education. Additionally, the Charities Act now recognises the following:
- the advancement of community welfare including the relief of those in need by reason of youth, age, ill-health, or disability
- the advancement of community development, including rural or urban regeneration
- the promotion of civic responsibility or voluntary work
- the promotion of health, including the prevention or relief of sickness, disease or human suffering
- the advancement of conflict resolution or reconciliation
- the promotion of religious or racial harmony and harmonious community relations
- the protection of the natural environment
- the advancement of environmental sustainability
- the advancement of the efficient and effective use of the property of charitable organisations
- the prevention or relief of suffering of animals
- the advancement of the arts, culture, heritage or sciences and
- the integration of those who are disadvantaged, and the promotion of their full participation, in society.
However, the extent to which the provisions of the 2009 Act are relevant for rating purposes has yet to be judicially determined.
If a charity charges fees for its services, does this mean it will be liable for rates?
Not necessarily. The real issue is that the charity must not make a "private profit". In the case of St. Vincent's Healthcare Group Limited (2009) IEHC113, a purpose-built car park operated on a commercial basis was determined by the High Court to be exempt. The Court decided that it was not just the nature of the activity carried on in the building but also the reason or objective (purpose) of the occupying body in engaging in that use which gives rise to the exemption.
Can the administrative offices of a charity qualify for rates exemption?
Are there other grounds for rates exemption?
In addition to the general charitable exemption (above), the Valuation Act 2001 specifically exempts properties used for:
- public religious worship
- caring for the sick
- burial grounds
- schools/educational institutions
- caring for the elderly/disabled
- community halls
- advancement of science/literature/fine arts
- conservation of the natural environment/built endowments, and
- constituency offices.
There are conditions attaching to some. However, it is uncertain whether a charity, on failing to meet the criteria of a specific exemption, can then seek qualification under the general exemption. For example, is advancement of religion to be confined to a church building and is the educational exemption to be confined to schools and colleges?
Does the Valuation Act 2015 now clarify entitlement to rates exemption?
No. This could have been achieved if, in addition to the definition of "charitable organisation" it had also adopted the definition of "charitable purposes" in the Charities Act 2009. Furthermore, it is unclear whether religious or educational charity can avail of the general charity exemption if they are outside the specified exemption applicable to a church or a school/college in schedule 4 of the Valuation Act 2001. These uncertainties have not been addressed in recent legislation.
In order to have rateability reviewed, it is necessary to show a material change of circumstances has occurred. It may be that the introduction of the Valuation Act 2015 is such a change of circumstances. Charities presently liable for rates should therefore review their circumstances in a timely manner to avail of this opportunity.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.