Court rules that the association was not ‘exclusively charitable’
Helena loses £6m tax appeal
A stock transfer housing association has lost an Appeal Court case against a multimillion-pound tax bill.
Helena Partnerships, which owns or manages 13,000 homes in north west England, had challenged a ruling from HM Revenue and Customs that meant it paid £6 million in corporation tax between 2002, when it took on stock from St Helens Council, and 2004.
The landlord argued that it should have been exempt from the tax as it was dedicated to charitable purposes, even though it did not formally register as a charity until 2004.
But Mr Justice Lloyd said that Helena’s objectives during the period were not exclusively charitable even though it is of ‘general public utility’.
He added: ‘Even accepting that there is an element, and a necessary element, of benefit to the community in the pursuit of Helena’s objectives, there is also a substantial element of benefit to individuals.
‘The provision of a housing stock available for occupation by tenants generally, rather than so as to relieve a charitable need, is not a charitable purpose.’
The landlord claimed that there was little difference between its activities before and after registering as a charity, at which point it stopped paying the tax. ‘In essence we were doing exactly the same thing,’ said Geoff Brown, executive director of business resilience at Helena.
Helena has argued its case through a series of hearings, but it is not expected to challenge the latest ruling. Mr Brown also said that the decision would not affect the association’s business plan as the money had been paid following the initial demand in 2004.
‘We never expected it back,’ he added. ‘It was never 100 per cent certain so we never included it in our business plan. If we did get it back it would be a bonus that we could have reinvested.’
Although the ruling could affect other LSVTs, most registered as charities immediately following the transfer of stock from councils.