28 October 2011 by

School’s Out… or is it?

The availability of scholarships and bursaries is becoming increasingly important in family budgeting. The Upper Tribunal Tax and Chancery Chamber recently considered the public benefit in relation to the charitable status of private fee-paying schools.

For an institution to be a Charity it must be established for a charitable purpose.  The Charities Act 2006 set down the definition of what is a ‘charitable purpose’.  For a purpose to be charitable it must now fall into the section 2(2) of the Charities Act 2006, but it must also be able to show it is for the public benefit. It is the public benefit test that has been giving schools a headache.

Although the advancement of education has been recognised as a charitable purpose for a long time and was confirmed as such by the Charities Act 2006, the problem has arisen because the Charities Act has now removed the rebuttable presumption that a charity established for the advancement of education is charitable.

Guidance published by the Charity Commission after the Charities Act 2006 came into force suggested that many private fee-paying schools would not meet the test of being for the public benefit.  The Charity Commission’s guidance on public benefit and fee charging states that there must be sufficient opportunity to benefit, in a material way that is related to the charity’s aims, for people who cannot afford the fees, including people in poverty.

The Independent Schools Council, representing private schools, challenged this guidance from the Charity Commission in a judicial review, and the matter was referred by the Attorney General to the Upper Tribunal for a resolution.

On the 14th October 2011 the Upper Tribunal (Tax and Chancery Chamber) published its decision on the case.  The decision, however, does not offer schools much help, although the Tribunal did state “a trust which excludes the poor from benefit cannot be a charity… when we refer to a school failing to act for the public benefit, we mean that it is making inadequate provision other than the provision of education to fee-paying students”.

The Tribunal deliberately refused to define adequacy, other than excluding “a token benefit for the school to be able to point at in order to cock a snook at the Charity Commission”. This essentially means that there is no specific threshold or benchmark which is deemed sufficient to demonstrate public benefit. Even so, the Independent Schools Council has claimed the decision as a victory for independent charitable schools.

Please email or call Jane Molyneaux with any questions.

24 October 2011 by

Penalty kicks, where it hurts

HMRC is cheerily promoting online filing of tax returns set in the context of how things can so easily go […]

24 October 2011 by

Nationality, Domicile and Wills

The recent case of Morris v Davies and others [2011] EWHC 1773 (Ch) is an example of the difficult, and potentially litigious, issues that can be encountered when writing a Will. With large scale migration into the UK over the last 60 years and an increasing number of Brits emigrating, working and owning property abroad, the legal notion of domicile is becoming increasingly important.

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