Helena Partnerships Ltd v HM Revenue and Customs & Anor

The Court of Appeal dismissed Helena's appeal that it was established for charitable purposes only during the period October 2001 to November 2004. The court held that Helena's objects, read with the incorporation of section 2(2) and (4) of the Housing Act 1996, were not confined to activities that are necessarily charitable and that the stated proviso "for the benefit of the community" did not by itself convert the broad range of powers into exclusively charitable purposes.

Key legal principles: the established tests for charity under Pemsel and the requirement that a purpose be within the "spirit and intendment" of the preamble to the Statute of Elizabeth (43 Eliz. c. 4) remain applicable; the court rejected a general rule that any specified public service is necessarily within that spirit. The provision of housing as such is not a charitable purpose unless it is directed to relieving a recognized charitable need (for example poverty, old age or infirmity), because the direct private benefit to occupants is not necessarily subsidiary to any public benefit.

The court applied these principles to Helena's memorandum and articles, the Housing Act 1996 provisions it incorporated and relevant authorities (including the ICLR case and decisions such as Williams' Trustees and Scottish Burial Reform). It concluded that Helena's objects permitted substantial non-charitable activity and that the provision of a housing stock available for tenants generally does not fall within the fourth head of charity unless directed to a charitable class in need.

Background and parties. Helena Partnerships Ltd, a company limited by guarantee and a registered social landlord from 1 July 2002, appealed assessments by HM Revenue and Customs that it was liable to corporation tax in respect of rental income for the period October 2001 to November 2004 unless it was established exclusively for charitable purposes. The Attorney-General intervened because of the wider importance for charity law.

Procedural history. Helena appealed HMRC assessments to the First-tier Tribunal which dismissed its appeal ([2010] UKFTT 71 (TC)); the Upper Tribunal (Tax and Chancery Chamber) dismissed the subsequent appeal ([2011] UKUT 271 (TCC)); the Court of Appeal granted permission and heard the appeal.

Nature of the claim and relief sought. Helena sought a declaration that it was established for charitable purposes only during the relevant period so that its funds were applicable for charitable purposes and the corporation tax assessments would not stand.

Issues before the court.

• Whether Helena's objects, as contained in its memorandum and articles (notably clause 4 and clause 4.5 incorporating section 2(2) and (4) of the Housing Act 1996), meant it was established for charitable purposes only.
• Whether the proviso that activities be "for the benefit of the community" confined Helena's powers to charitable activities.
• Whether the provision, maintenance and management of a housing stock available for tenants generally is a charitable purpose under the Pemsel fourth head (objects of general public utility) or must be confined to relief of need.

Court’s reasoning (concise). The court reviewed the authorities on charitable purposes (including Pemsel, Williams' Trustees, the ICLR case and subsequent decisions) and reaffirmed that a purpose must fall within the "spirit and intendment" of the Statute of Elizabeth (directly or by analogy) to be charitable under the fourth head. It rejected an expansive rule that any specified public service is necessarily within that spirit. The court held that (i) Helena's objects were separate and could be pursued independently and the incorporation of section 2(4) permitted activities (including managing or assisting non-charitable bodies, shared ownership, services to owners) which need not be charitable; (ii) the mere statement that objects are to be for "the benefit of the community" is not conclusive; (iii) the provision of housing as such is not a charitable purpose unless aimed at relieving a recognized charitable need because the direct private benefit to occupants is substantial and not merely subsidiary to public benefit.

Procedural outcome. The Court of Appeal dismissed the appeal, affirming the Upper Tribunal’s conclusion that Helena was not established for charitable purposes only in the period in question.

Appeal dismissed. The Court of Appeal held that Helena's objects, read with the powers incorporated from section 2(2) and (4) of the Housing Act 1996 and the terms of its memorandum and articles, were not confined to exclusively charitable purposes. The provision of a housing stock available for tenants generally is not, in itself, a charitable purpose under Pemsel's fourth head unless directed to relieving a charitable need; the statement that activities are "for the benefit of the community" did not convert the broad powers into exclusively charitable objects.

First-tier Tribunal (Tax Chamber) — appeal dismissed ([2010] UKFTT 71 (TC)). Upper Tribunal (Tax and Chancery Chamber) — appeal dismissed and permission to appeal refused ([2011] UKUT 271 (TCC), reported at [2011] STC 1307). Permission to appeal to the Court of Appeal was granted by Lord Neuberger MR; Court of Appeal decision [2012] EWCA Civ 569.