Naomi Larsson 08 July 2019

Court date set for councils' £2bn tax dispute with NHS trusts

A court date has been set for the long-running legal dispute between councils and NHS trusts over rates relief.

NHS hospitals are calling for charitable status and cuts in their business rates tax, which could cost councils and government as much as £2.35bn in tax rebates for mandatory relief dating back to April 2010.

The trusts say they should be treated as charities, which receive 80% off their bills. However, previous guidance concluded NHS trusts are not charities, therefore not entitled to rates relief.

The case, brought by Derby Teaching Hospitals NHS Foundation Trust and 16 other trusts against 45 councils, will be heart in the High Court on 4 November.

The Local Government Association’s former chair Lord Porter had previously told government the NHS should not be allowed to extract large sums of money from another public body.

The LGA, which is representing the affected councils, says the applications are “unfounded”.

A spokesperson from the association said: “The LGA is supporting member councils who have received applications for mandatory relief from business rates on behalf of a number of NHS trusts and are working with them.

“We have sought legal advice from counsel. We believe that NHS Trusts and Foundation Trusts are not charities, and that the applications for rate relief are therefore unfounded.”

If successful, the case would be another blow for local government finances, as councils are expected to rely on council tax and business rates for the vast bulk of their funding.

At the recent LGA conference, nearly 50 councils said they may not be able to fund services they are legally obliged to provide by 2022.

Currently around one in four private hospitals, such as Nuffield Health, are registered as charities and are entitled to the relief. But as of January 2019, there were 1,554 NHS hospitals and clinics in England and Wales subject to business rates. They are expected to pay £408.55m in rates this financial year, according to real estate advisor Altus Group.

Robert Hayton, head of UK business rates at Altus Group, called on the government to end the dispute before a costly trial. 'If the case was successful it risks setting a precedent for other deserving public services, with the significant loss in revenue which goes to fund essential public services having to shift to businesses at the next revenue neutral revaluation in 2021 at a time when the tax burden is already far too high.'

SIGN UP
For your free daily news bulletin
Highways jobs

Senior Social Worker

London Borough of Richmond upon Thames and London Borough of Wandsworth
£46,206 - £55,992
Senior Social Worker
Recuriter: London Borough of Richmond upon Thames and London Borough of Wandsworth

Waste Operations Support Officers

Durham County Council
£29,071 - £32,046
Temporary until 1 June 2029   Refuse and Recycling are looking for 3 Waste Operations Support Officer to work in the South and East of County Durham. Peterlee
Recuriter: Durham County Council

Recovery Worker

Durham County Council
Grade 7 - £31,015 – £34,811 per annum.
Do you want to make a real difference to the lives of people experiencing hoarding and self-neglect behaviours?   As an Agile Recovery Worker within o Durham
Recuriter: Durham County Council

Finance Officer

Durham County Council
Grade 7, £30,024 - £33,699 per annum. Pay award pending.
We are seeking a Finance Officer to join DurhamLearn, where you will play a key role in supporting the financial administration, budget monitoring and Durham
Recuriter: Durham County Council

Social Work Consultant

Durham County Council
Grade 13 - £47,181 - £51,356 (Pay Award Pending)
Do you believe every child deserves to grow up feeling loved, safe, and supported, with a lasting sense of family, belonging, and stability?   Are you Durham
Recuriter: Durham County Council
Linkedin Banner