Nuffield health has won a landmark case in the High Court over mandatory business rate reliefs for one of its London gyms.
Up against Merton London Borough Council, Nuffield Health – a registered healthcare charity – had been denied the relief worth an 80% rebate as the Council’s officer deemed the premises were not being “wholly or mainly used for charitable purposes”. MLBC argued the monthly membership fee of £80 meant the exclusion of members of public who couldn’t afford it and so didn’t fulfil the “public benefit” definition to qualify for the relief.
Nuffield Health, which runs 112 fitness and wellbeing clubs, 31 hospitals, healthcare clinics, and more than 200 workplace wellbeing services, is the UK’s largest healthcare charity. It challenged the council’s decision not to grant them the mandatory 80% discount available to charities on their business rates bill for its gym in Colliers Wood. As a registered charity, it claims its objective are to “advance, promote and maintain health and healthcare of all descriptions and to prevent, relieve and cure sickness and ill health of any kind, all for the public benefit”.
The premise’s first floor is principally taken up by a gym and an area for spinning classes but also features a crèche, available only to members, office space and storage areas. The ground floor houses a swimming pool and smaller spa pool and sauna and steam rooms, together with toilets, changing rooms, two consultation rooms, and a reception and waiting area where refreshments can be purchased. The waiting area is primarily used by people resting after exercise but also serves as a holding area for local school students who attend a swim school and for quarterly £Meet our Experts” events. There is also an underground car park for the use of members.
Ahead of the hearing Nuffield Health said in a statement: “As recognised by the Charity Commission, Nuffield Health is a registered trading charity, dedicated to building the health of the nation. As such, we qualify for rates relief across our facilities to deliver on our charitable purpose.”
However, Caroline Holland, Merton’s director of corporate services, explained at the LGA Local Government Finance Conference that the council lost 80% of its business rates immediately when the company previously running the gym facility sold it to Nuffield Health. Before the High Court hearing she was quoted as saying: “…then they wanted the 20% top up as well as the discretionary rate… we’re saying we don’t agree with charging £80 a month with gym membership is really a charitable business.”
Regardless, High Court judge Stuart Isaacs QC ruled in favour of Nuffield Health stating: If it were necessary to determine whether the use of the Premises themselves is for or wholly ancillary to the public benefit, I would have concluded that the public benefit requirement is satisfied.
“ The defendant submitted that the user of the Premises could not be regarded as being
wholly or mainly for charitable purposes because they are used to provide high-end
services already available on the open market at full price, at a level which excludes the
poor…. it referred to the following matters….that the main purpose of the Premises’ use is
- the fees charged being set at market rates so as to maintain a margin to
- (ii) the level of membership fees, which would deter those of modest means
from membership, including in the local area and which are higher than the cost of membership of other local fitness facilities;
- (iii) the creche fees and charges for other services;
- (iv) the unavailability at the Premises of some free and reduced-fee services
offered by the claimant elsewhere; (v) the limited and token additional services offered free or at a reduced cost to those who otherwise could not afford to use the Premises, which are no more than would be expected of any business seeking to advertise and promote its sales on a commercial basis.
He concluded: “In my judgment, none of those matters, either individually or collectively, leads to the conclusion that those of modest or some means are excluded from benefiting from the use of the Premises….I do not regard the Premises as providing only token facilities for the poor.”
The full report can be seen here: Nuffield Health v London Borough of Merton  EWHC 259 (Ch)