Housing Association Not Charity

It is generally considered that organisations which have charitable objects (such as the relief of poverty) as their core purpose will qualify to be treated as charities. A recent tax case shows the limits that apply to this assumption, however.



The case involved a housing association that had taken over part of the housing stock of St Helens Council in 2002. The arrangements gave the Council the right to nominate 75 per cent of the tenants.



The housing association had been established in 2001. At issue was whether it had been established for charitable purposes only, because there was no stipulation that the housing should be let to those who were poor, infirm or elderly.



The judge hearing the case in the Court of Appeal concluded that even if the housing association did provide a substantial benefit to the community, when it was first established there was also a substantial benefit to individuals that was not subordinate to the benefit to the community. Nor could the provision of the housing be said to be ‘works of general public utility’.



The fact that the housing could be supplied to persons who were not suitable recipients of charity meant that charitable status did not apply at that time.



In 2004, the situation had been rectified so that there was no longer any doubt about the housing association’s charitable status, and it was registered as a charity at that time. However, because the Court ruled that it was not a charity between 2001 and 2004, the housing association is unable to reclaim £6 million in Corporation Tax paid during that period.