Helena Partnership Ltd v Revenue & Customs Commissioners & Attorney-General (2012)
The provision of housing accommodation, otherwise than for those in some relevant charitable need, was not a charitable purpose within the spirit and intendment of the preamble to the Charitable Uses Act 1601, either directly or by analogy with any other recognised purpose. It followed that the objects of a housing association were not exclusively charitable and it was accordingly liable for corporation tax on the rents that it received.
The appellant housing association (H) appealed against a decision ( S.T.C. 1307) that it was not established for charitable purposes and was therefore liable for corporation tax on the rents that it received.
H was a company limited by guarantee not having a share capital. In October 2001 it adopted a new memorandum of association and new articles. Its objects were then the business of providing housing, accommodation, assistance to help house people, and associated facilities and amenities, and any other object that could be carried out by a company registered as a social landlord with the Housing Corporation, for the benefit of the community. It was not to trade for profit. In July 2002 it took a transfer of a large part of the local authority's housing stock and was registered with the Housing Corporation as a social landlord. In November 2004 it changed its memorandum and articles of association and became registered as a charity. The issue was whether in the period from October 2001 to November 2004 H was established for charitable purposes only, so that its funds were applicable for those purposes. If it was not so established, then it was liable for £6 million of corporation tax on the rents that it received.
H submitted that the range of activities which could be undertaken under the objects clause was constrained by the requirement that whatever H did had to be done for the benefit of the community, and on that basis the operations open to H were of a kind which were limited to that which was charitable.
(1) All the objects set out in, or incorporated into, the objects clause in the memorandum of association were separate and independent objects, which could be pursued for their own sake. H had to have tenants, since otherwise the provisions of the articles would not be capable of being operated, so it could not discontinue the purposes under which it owned, managed and maintained accommodation let to tenants. However, that did not by itself make the other objects in any way dependent or subsidiary. It did not mean that another object, pursued concurrently, could not be independent and carried on for its own sake (see para.19 of judgment). (2) To be charitable under the fourth head of charity of "purposes beneficial to the community" a purpose had to be within the spirit and intendment of the preamble to the Charitable Uses Act 1601; not every object of public general utility was necessarily charitable, Williams Trustees v Inland Revenue Commissioners  A.C. 447 followed and Incorporated Council of Law Reporting for England and Wales v Attorney General  Ch. 73 considered. The court rejected H's submission that the effect of the Incorporated Council case was that to provide a specified public service was necessarily within the spirit and intendment of the preamble and therefore charitable, unless there was good reason to the contrary. H had to show that its purposes were within the spirit and intendment of the preamble, directly or by analogy, but the statement that its purposes were to be carried out for the benefit of the community was not sufficient for that purpose (see paras 60-66). (3) The fact that Parliament had provided for, or even prescribed, something to be done which was, in a general sense, for the public benefit did not show that to undertake it was a charitable purpose, General Nursing Council for England and Wales v St Marylebone BC  A.C. 540 considered. (4) The pursuit of H's objects had to be for the public benefit, and any element of benefit to individuals had to be subordinate or ancillary or incidental, Inland Revenue Commissioners v City of Glasgow Police Athletic Association  A.C. 380 and Inland Revenue Commissioners v Oldham Training and Enterprise Council  S.T.C. 1218 considered. The use of words such as "for the benefit of the community" in the objects clause would not conclusively exclude any non-subordinate individual benefit as a matter of fact (paras 72-93). (5) Objects that could be carried out by a social landlord were set out in the Housing Act 1996 s.2. Those objects were not on their face limited to charitable activities. The "benefit of the community" proviso did not exclude non-charitable purposes, and the wider objects would not be within the spirit and intendment of the preamble. Even without regard to the additional statutory objects, H could not satisfy the requirements of charity. The provision of housing accommodation, otherwise than for those in some relevant charitable need, was not a purpose within the spirit and intendment of the preamble, either directly or by analogy with any other purpose which had been so recognised. An alternative way to the same conclusion was that the pursuit of H's objects involved a substantial element of benefit to individuals which could not be regarded as only subordinate to the achievement of the benefit to the community (paras 103-111).