Helena Partnerships Ltd v HM Revenue and Customs & Anor

For the fourth head of charity, it is insufficient that an object is expressed to benefit the community or provides a public service. The purpose must fall within the spirit and intendment of the preamble to the Statute of Elizabeth, directly or by analogy. A statutory or governmental function is not itself a touchstone of charitable status. Individual benefits must remain subordinate to public benefit. Housing provided generally to tenants confers a substantial direct benefit and is not charitable under the fourth head unless provided to relieve a relevant charitable need. Broad independent objects permitting housing sales, management, services to owners and assistance to non-charitable associations may also prevent an organisation being established exclusively for charitable purposes.

Helena, a registered social landlord, appealed corporation tax assessments relating to its objects between 2001 and 2004. The First-tier Tribunal dismissed its appeal on the charity-status issue: [2010] UKFTT 71 (TC). The Upper Tribunal dismissed a further appeal: [2011] UKUT 271 (TCC). Helena argued that providing and maintaining housing stock for the benefit of the community was a charitable purpose, and that its statutory housing-association objects were confined by that public-benefit requirement. The central questions were whether general housing provision fell within the fourth head of charity and whether the objects were exclusively charitable.

1. Appeal dismissed unanimously. Lord Justice Lloyd gave the leading judgment, with Lady Justice Black and Lord Justice Lewison agreeing.
2. The objects in Helena’s memorandum were independent and could be pursued for their own sake. Incorporation of the additional purposes in section 2(4) of the Housing Act 1996 materially widened the activities available to Helena. They included acquiring houses for sale, managing houses not necessarily owned by an altruistic body, providing services to owners, and assisting housing associations or voluntary organisations which were not necessarily charitable. The words requiring benefit to the community did not confine those objects to exclusively charitable operations.
3. Under the fourth head of charity, an assertion of public benefit or general public utility is not enough. The purpose must be of the right kind and fall within the spirit and intendment of the preamble to the Statute of Elizabeth, directly or by analogy. The decision in Incorporated Council of Law Reporting v A-G [1972] Ch 73 was binding authority that a suitable public-utility purpose could qualify, but did not establish a general presumption that every specified public service was charitable. The approach was consistent with Williams’ Trustees v Inland Revenue Commissioners [1947] AC 447.
4. The benefit to individuals must be subordinate, ancillary or incidental to public benefit. The constituent document is relevant, but cannot override a clear conclusion that individual benefits are too substantial. The assessment depends on the nature of the objects, the constituent document and the nature of the benefits.
5. Housing cases such as Re James [1932] 2 Ch 25, Re Estlin (1903) 72 LJ Ch 687 and Joseph Rowntree Memorial Trust Housing Association Ltd v A-G [1983] Ch 159 supported charitable housing where accommodation relieved relevant need. Re Sanders [1954] Ch 265 showed that general housing provision for working people was not charitable without that limitation. Housing gives occupants a substantial direct benefit, unlike the indirect benefit from a road, bridge, sea-wall or fire service. Accordingly, Helena’s general housing purpose was not charitable under the fourth head, and its objects were in any event too broad. The appeal was dismissed.

• Court of Appeal (Civil Division): appeal dismissed: [2012] EWCA Civ 569.
• Upper Tribunal (Tax and Chancery Chamber): appeal dismissed and permission to appeal refused: [2011] UKUT 271 (TCC); reported at [2011] STC 1307.
• First-tier Tribunal: appeal against the assessments dismissed on the relevant charity-status issue: [2010] UKFTT 71 (TC).