The support measures for business introduced by the government in light of the COVID-19 pandemic includes a waiver of commercial rates until the end of September 2020. However, organisations operating in the community and charitable sector should consider if they may already be entitled to an exemption from commercial rates. This exemption potentially applies to charities, community facilities such as swimming pools and men’s sheds and to organisations operating in the arts sector.
In particular, following recent legislative changes and case law, the scope for registered charities to avail of the exemption has broadened. Therefore, while having charitable status does not automatically confer an exemption, organisations with such status should consider if it may apply to them.
As regards the first condition above, the Act applies the definition of charitable organisation as set out in the Charities Act 2009, so that if an organisation is registered with the Charities Regulatory Authority (CRA) it will be regarded as a charitable organisation for the purposes of the Valuation Act.
The charity must however still illustrate that it is using the property for charitable purposes. While there was some uncertainty regarding whether this condition would be met automatically by registered charities, a recent decision of the Valuation Tribunal (Jesuit Mission Trust v Commissioner of Valuation) held that, in order to be a charitable organisation under the Charities Act 2009 an organisation must have a charitable purpose and apply its property towards that purpose, an organisation registered with the CRA would also meet the second condition.
Private profit – Commercial enterprises
However, where the property is being occupied for private profit the exemption will not apply. Therefore, where a commercial enterprise is being carried on in the property the exemption might not be granted. For example, charity shops typically are not granted the exemption as while the profits generated may be used for charitable purposes, the use to which the property itself is put is not to carry on the activities of the charity but to carry on a commercial enterprise.
Nevertheless, even where profits are being made it does not necessarily follow that the exemption will not apply. For example, in one case (St Vincent’s Healthcare Group) while a car park adjoining a hospital was being operated on a commercial basis, the car park would not have existed were it not for the hospital (which itself had charitable status and qualified for the exemption) and it was held that the two properties should not be considered in isolation but together so that the exemption should apply.