Decisions upon charitable status rarely reach the higher courts. The Court of Appeal judgment in Helena Partnerships Ltd v HMRC is therefore particularly important. The decision includes consideration of whether objects 'for the benefit of the community' are for the public benefit and therefore charitable. The Court of Appeal unanimously dismissed an appeal by the housing association against the decision.
Helena Partnerships Ltd was incorporated in January 2001. It was a registered social landlord and its objects were the provision of housing, accommodation, assistance to help house people and associated facilities and amenities, and any other object that could be carried out by a social landlord for the benefit of the community. It therefore believed itself to be charitable with no tax reporting requirement; however the Court of Appeal found otherwise.
The key points of the judgment are as follows.
- A statement in the objects that the activities of an organisation must be for the benefit of the community is not enough to confer charitable status.
- The provision of good quality housing stock is not analogous to the other public works that have been regarded as charitable.
- The provision of housing is only charitable if it is directed at the relief of a charitable need such as the relief of poverty or illness.
This case has cost Helena Partnerships Ltd £6m in corporation tax relief and emphasises the importance of the objects. In November 2004, Helena changed its objects and registered as a charity with the Charity Commission, thus achieving excluded status from 2004.
Although it is time consuming, if you are in any doubt regarding your charitable status it is worth considering obtaining clearance from HMRC or Charity Commission registration. Smith & Williamson can help you with this.
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.
