British Museum court case has implications for charitable sector

An interesting case is winding its way through the courts at the moment, involving the British Museum and a disputed £720,000 business rates bill.

The museum is currently challenging a decision made by the London Borough of Camden that the museum’s Gallery Café, Great Court Restaurant and gift shop are not eligible for mandatory charity business rates relief and therefore liable to pay full business rates on these assessments rather than relief being applied to the whole site.

Following action by the Valuation Office Agency to separately assess the museum, the Gallery Café, Great Court Restaurant and the gift shop, the British Museum made an application for charity relief on the new assessments which the LB of Camden rejected. Assessment of property according to use by the Valuation Office Agency is uncontroversial and follows case law involving, amongst others, the National Trust. But the approach of the Billing Authority does appear more controversial and is no doubt being watched carefully by other UK charities to see what precedent, if any, will be formed.

Camden’s position seems to be influenced by the fact that the museum’s two restaurants have been run by the private catering company Benugo for the past four years and the success of the case will revolve around who is in rateable occupation: the museum or the private company.

Ordinarily if there is a direct link between the use of the premises and the charitable objects of charity concerned charitable relief should be granted, the issue of rateable occupation will be determinative but charitable organisations must think carefully about outsourcing operations if they wish to avoid such unforeseen costs.

This is an issue that I’ve looked at successfully on behalf of a national charity, but beware Local Authorities are looking closely at all avenues to raise revenue and from all organisations in the UK. Perhaps, if recession bites as devolution takes hold, charities already under pressure will face an even more difficult environment.