Tax Avoidance – the lawful avoidance or reduction of tax by arranging one’s affairs in order to minimise the amount of tax payable

Under investigation by the Charity Commission

Preston City Council v Oyston Angel Charity 2012 QBD

• Preston City Council v Oyston Angel Charity 2012 QBD

• Appeal by case stated from Preston Magistrates’ Court

• Oyston Mill owned by Denwis Ltd

• Oyston Angel Charity (formerly Oyston Angel Trust) - the “Trust” set up in 2005

• Objects are “social relief, rehabilitation and the promotion of the welfare” of offenders, former offenders, disabled including addiction and persons under social or economic deprivation

• Registered as a charity 30 August 2011

• Previously accepted as a charity for tax purposes

30.03.2011 – Denwis Ltd granted a licence to the Trust subject to:

• 30.03.2011 – Denwis Ltd granted a licence to the Trust subject to:

• The Trust had the right to occupy and use the units

• Permitted use for charitable purposes only

• Trust could sublet but only for charitable services

• Trust to pay all rates, if any

• Units below RV £2,600 were excluded

• No dispute that as licensee, Trust liable for rates

All 8 units unoccupied for over 6 months

• All 8 units unoccupied for over 6 months

• One unit now sub-licensed to Methodist Action Northwest Ltd as a charity shop

• Application for 8 liability orders for 2011-12

• Magistrates – Trust did not intend to occupy themselves, but when next in use each unit would be wholly or mainly used for charitable purposes – hence units zero rated while empty

• Liability orders refused – Preston appealed by case stated

Local Government Finance Act 1988 s 45A(2) provides that empty properties are zero rated where -

• Local Government Finance Act 1988 s 45A(2) provides that empty properties are zero rated where -

• The ratepayer is a charity, and

• It appears that when next in use the hereditament will be wholly or mainly used for charitable purposes (whether of that charity or of that and other charities)

• Preston contended that it must be next used by that charity

• Trust submitted that it was not necessary to show that the owning charity would occupy

Trust also contended that the words “whether of that charity or of that and other charities” meant “whether of that charity or other charities”

• Trust also contended that the words “whether of that charity or of that and other charities” meant “whether of that charity or other charities”

• The issue of the purposes of the charity occupying the charity shop was not considered

• The only issue was whether it had to appear that the owning charity would next occupy and use the property

• The Magistrates accepted the Trusts arguments

Appeal by case stated posed the question “Whether the justices were right to conclude that the [Trust] had established that the [Trust] was under section 45A(2) of the Local Government Act 1988 exempted from liability for each of the applications for liability orders on the basis that the occupier/or user of each of the premises the subject of the said application would be charities other than the [Trust].”

• Appeal by case stated posed the question “Whether the justices were right to conclude that the [Trust] had established that the [Trust] was under section 45A(2) of the Local Government Act 1988 exempted from liability for each of the applications for liability orders on the basis that the occupier/or user of each of the premises the subject of the said application would be charities other than the [Trust].”

Judge concluded that Preston’s arguments would require the addition of the words “by that charity” after “wholly or mainly used”

• Judge concluded that Preston’s arguments would require the addition of the words “by that charity” after “wholly or mainly used”

• The words mean “used for the charitable objects of the owning charity, accompanied or not by other charitable purposes”

• “The requirement for it to appear additionally that, when the property is next used, the currently-owning charity will occupy and use the property cannot be read in”

Hence the answer to the question posed is “Yes” the magistrates were correct

• Hence the answer to the question posed is “Yes” the magistrates were correct

• “I stress that that answer is based upon the issues that were before the magistrates, before whom the possibility of charities sought as sub-licensees having charitable purposes entirely different from the wide charitable objects of the Trust was not in issue”

• Appeal dismissed

Public Safety Charitable Trust v Milton Keynes Council, PSCT v South Cambridgeshire District Council, Cheshire West and Chester Borough Council v PSCT

• Public Safety Charitable Trust v Milton Keynes Council, PSCT v South Cambridgeshire District Council, Cheshire West and Chester Borough Council v PSCT

• [2013] EWHC 1237 (Admin)

• CO/8616/2012

• Decision given on 14 May 2013

• Billing Authorities won all 3 cases and costs were awarded

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