The High Court will hear a dispute between NHS trusts and councils in early November over whether trusts should be treated the same as charities and therefore receive 80% off their business rates, it has been reported.
Some £2.35bn is said to be at stake in the case. The test case was brought by Derby Teaching Hospitals NHS Foundation Trust and 16 others against 45 councils. A trial date has been set for 4 November 2019.
According to Altus Group, analysis of official Government data shows that NHS hospitals in England and Wales will pay a total of £408.55m in business rates this financial year for 2019/20. This year’s tax bill is up 42.8% with trusts paying £122.38m more compared to the final year before a 2017 revaluation came into effect.
This financial year hospitals such as the Royal London Hospital will pay £9.16m in business rates whilst the Queen Elizabeth Hospital in Birmingham and Bristol’s Southmead Hospital will pay £7.15m and £5.99m respectively.
“If successful, tax rebates for mandatory relief will be back dated to 1 April 2010 costing cash-strapped town halls and the Government around £2.35bn overall,” Altus Group said.
The Local Government Association, which is representing the affected councils, argue that NHS trusts and foundation trusts are not charities and, therefore, not eligible for mandatory business rate relief.
Many private healthcare groups, such as Nuffield Health, the UK’s third largest charity by income, are registered as charities.
Robert Hayton, Head of UK Business Rates at Altus Group, said: “For many people it is iniquitous to treat NHS hospitals like businesses and expect them to pay normal business rates.” He called upon the Government to end the dispute before a costly trial.
Hayton added “that if the case was successful it risks setting a precedent for other deserving public services with the significant loss in revenue which goes to fund essential public services having to shift to businesses at the next revenue neutral revaluation in 2021 at a time when the tax burden is already far too high.”