Freemasonry and the VAT exemption for activities of a ‘philosophical, philanthropic or civic nature’
Our pick of this week's cases
In United Grand Lodge of England v HMRC [2015] UKUT 589 (10 November 2015), the UT found that freemasonry did not fall within the exemption for activities of a ‘philosophical, philanthropic or civic nature’.
The FTT had dismissed the appeal of the United Grand Lodge of England (UGLE) against HMRC’s decision that its aims were not of a ‘philosophical, philanthropic or civic nature’ for the purpose of the exemption under the Principal VAT Directive, article 132(1)(l). The FTT had found that whilst the UGLE had aims which fell within the exemption, for example, philosophical aims, it also had other aims which were not insignificant or ancillary to the qualifying aims.
The UT observed that the FTT had been right to test the UGLE’s aims, in order to determine the proportion which fell within the categories of exemption; and then to decide, on the basis of its findings of fact, whether those which fell outside the categories were of sufficient magnitude to prevent the qualifying aims from being main aims. The UT also agreed with the FTT’s finding that the ‘promotion of Freemasonry’ broke down into a series of aims.
Agreeing with the FTT, the UT noted that the UGLE’s brochure referred to masonry as consisting of ‘a body of men brought together for the sake of mutual intellectual social and moral improvement’, and that this was an aim which did not fall within the exemption.
Referring to philanthropic aims, the UT added that 75% of charitable spending was directed to masons and their dependants, so that the FTT had been entitled to find that not all of the UGLE’s charitable giving had a philanthropic aim. Furthermore, only a small part of the UGLE’s activities were civic in nature, since as pointed out by the FTT, ‘charitable activities of Freemasons were largely unrelated to any relationship of citizens with the state’. The UT added that the exhortation to good deeds and to be a good citizen was not enough to colour the entirety of the UGLE’s activities.
Why it matters: Applying Edwards v Bairstow [1956] AC 14, the UT was only prepared to set aside the FTT’s findings of facts if they had been made ‘without any evidence or upon a view of the facts which could not reasonably be entertained’. The FTT had been entitled to find that the UGLE had aims which did not fall within the exemption.
Freemasonry and the VAT exemption for activities of a ‘philosophical, philanthropic or civic nature’
Our pick of this week's cases
In United Grand Lodge of England v HMRC [2015] UKUT 589 (10 November 2015), the UT found that freemasonry did not fall within the exemption for activities of a ‘philosophical, philanthropic or civic nature’.
The FTT had dismissed the appeal of the United Grand Lodge of England (UGLE) against HMRC’s decision that its aims were not of a ‘philosophical, philanthropic or civic nature’ for the purpose of the exemption under the Principal VAT Directive, article 132(1)(l). The FTT had found that whilst the UGLE had aims which fell within the exemption, for example, philosophical aims, it also had other aims which were not insignificant or ancillary to the qualifying aims.
The UT observed that the FTT had been right to test the UGLE’s aims, in order to determine the proportion which fell within the categories of exemption; and then to decide, on the basis of its findings of fact, whether those which fell outside the categories were of sufficient magnitude to prevent the qualifying aims from being main aims. The UT also agreed with the FTT’s finding that the ‘promotion of Freemasonry’ broke down into a series of aims.
Agreeing with the FTT, the UT noted that the UGLE’s brochure referred to masonry as consisting of ‘a body of men brought together for the sake of mutual intellectual social and moral improvement’, and that this was an aim which did not fall within the exemption.
Referring to philanthropic aims, the UT added that 75% of charitable spending was directed to masons and their dependants, so that the FTT had been entitled to find that not all of the UGLE’s charitable giving had a philanthropic aim. Furthermore, only a small part of the UGLE’s activities were civic in nature, since as pointed out by the FTT, ‘charitable activities of Freemasons were largely unrelated to any relationship of citizens with the state’. The UT added that the exhortation to good deeds and to be a good citizen was not enough to colour the entirety of the UGLE’s activities.
Why it matters: Applying Edwards v Bairstow [1956] AC 14, the UT was only prepared to set aside the FTT’s findings of facts if they had been made ‘without any evidence or upon a view of the facts which could not reasonably be entertained’. The FTT had been entitled to find that the UGLE had aims which did not fall within the exemption.
