Hospitals’ £1.5bn rate rebate claim rejected by High Court

A case that could have seen NHS trusts awarded £1.5bn in business rate refunds has been rejected by the High Court.

The case was lead by University Hospitals of Derby and Burton (UHDB) NHS Foundation Trust who argued that they, and other trusts, should be treated as charities and given the 80% reduction in business rates that private hospitals receive.

Christopher Tidmarsh QC, representing UHDB and 16 other trusts asserting that the goods and services they provided ‘could easily be constituted as a charity’.

However, Mr Justice Morgan rejected the claim, saying that the foundation trust is ‘not established for charitable purposes only and so is not a charity within the meaning of section 67(10) of the 1988 Local Government Act or section 1(1)(a) of the 2011 Act’.

He said: ‘In the case of Derby Teaching Hospitals NHS Foundation Trust alone, it claims to recover in excess of £17 million in respect of
the period of 6 years prior to its claim.

‘If every foundation trust in the country were to claim repayment of the rates it had paid in the last six years, the sums involved would be very significant.’

A spokesman for the Local Government Association (LGA) said the membership body welcomed the ruling, describing it as a ‘common-sense’ decision.

‘Today’s 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 £1.5 billion in unfounded backdated business rates relief nor see them eligible for 80 per cent 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.’

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