Conservative and Unionist Central Office v Burrell

For corporation tax purposes, an unincorporated association requires two or more persons joined for common non-business purposes by a contractual bond. The members must undertake mutual duties and obligations under sufficiently certain rules which identify control of the organisation and its funds. Membership must also be capable of being acquired and relinquished voluntarily.

Co-operation among constitutionally independent bodies does not create an overarching association without contractual links between all alleged members. Nor may such an association be inferred merely because that characterisation would provide a convenient legal explanation for centrally administered funds.

The Inland Revenue assessed the Conservative and Unionist Central Office to corporation tax on investment income and interest for five accounting years. The Special Commissioners found that the Conservative and Unionist Party was an unincorporated association and therefore a company within sections 238(1) and 526(5) of the Income and Corporation Taxes Act 1970.

Vinelott J allowed an appeal by case stated and discharged the assessments. The Revenue appealed. The central issue was whether the Party's parliamentary, national and constituency elements were contractually united as one unincorporated association, so that its investment income was chargeable to corporation tax.

1. Appeal dismissed unanimously. Lawton LJ and Brightman LJ held that the Conservative and Unionist Party was not an overarching unincorporated association. Fox LJ agreed with both judgments. The assessments to corporation tax therefore remained discharged.
2. Per Lawton LJ, the expression “unincorporated association” in section 526(5) of the Income and Corporation Taxes Act 1970 denotes two or more persons bound together for common non-business purposes by mutual undertakings. Their organisation must impose mutual duties and obligations, contain rules identifying control of the organisation and its funds, and permit voluntary entry and departure. The bond between its members must be contractual and sufficiently certain to be justiciable.
3. The local constituency associations, the National Union and the Parliamentary party had political links but lacked the necessary contractual links. Members of constituency associations had no direct contractual relationship with members of the Parliamentary party. The arrangements for selecting the Party Leader did not bridge that constitutional gap. The identity and authority of the body capable of changing those arrangements were also uncertain.
4. An association founded on contract must have arisen through an agreement made on an identifiable occasion or in identifiable circumstances. The Party's history disclosed no such agreement. It instead showed separate organisations co-operating for political purposes while retaining independent organisational existences.
5. The existence of an overarching association could not be established by reasoning backwards from the need to explain the lawful administration of central funds. Per Brightman LJ, a contribution to those funds could be analysed as money received under a mandate. Once the authorised contribution was mixed with the central fund, the mandate became irrevocable, although a contributor could restrain or seek redress for misapplication while the contributor's money remained represented in the fund. Brightman LJ expressly treated this analysis as unnecessary to the issue for decision and did not determine the position of testamentary gifts.
6. The appeal was dismissed with costs. Leave to appeal to the House of Lords was refused.

• Court of Appeal: Dismissed the Inland Revenue's appeal unanimously, with costs, and refused leave to appeal to the House of Lords.
• High Court, Chancery Division: Vinelott J allowed the appeal by case stated from the Special Commissioners, held that the Party was not an unincorporated association and discharged the corporation tax assessments.
• Special Commissioners: Held that the Central Office was an unincorporated association and was chargeable to corporation tax under sections 238(1) and 526(5) of the Income and Corporation Taxes Act 1970.