NHS trusts' claim for backdated business rates relief rejected

A claim by 17 NHS trusts that they are charities and should receive backdated business rates relief has been rejected by the High Court.

The case was taken against 45 local authorities by Derby Teaching Hospitals NHS Foundation Trust and 16 others, asking to be given backdated relief of 80 per cent.

But the ruling said: “It is clear that the drafting style adopted in the [National Health Service Act] 2006 Act in relation to foundation trusts was not with a view to ensuring that their purposes were narrowly stated so that they would be exclusively charitable purposes.

“Instead, the drafting style adopted appears to have been to define the functions of a foundation trust in wide terms; hence, the use of words like “any purposes”, “related to” and “in connection with”.

“The result of the above reasoning is that a foundation trust is not established for charitable purposes only and so is not a charity.”

A spokesperson for the Local Government Association (LGA) said: “The ruling is good news for councils and the local services our communities rely on across the country.

“Councils, supported by the LGA, are pleased this common-sense decision will not see them having to pay NHS trusts and foundation trusts £1.5bn in unfounded backdated business rates relief nor see them eligible for 80% relief going forward.

“Business rates, alongside council tax, are an extremely important source of income for local government so this would have huge implications for residents and the vital local services they rely on.”