Legal victory saves £1.5bn

The LGA and member councils have saved an estimated £1.5 billion after winning a legal case against NHS trusts that were trying to claim charitable business rates relief.

The foundation trusts attempted to claim a discount on their business rates and rebates, on the basis that they should have been classified as charities. The LGA has been supporting 47 councils since 2015 in defending this action, as the decision affects all councils.

The High Court ruled against the foundation trusts and ordered them to pay the councils’ full costs. The judge refused leave to appeal, but there is still the opportunity for the foundation trusts to apply directly to the Court of Appeal for permission to appeal.

The LGA said: “The High Court’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 an estimated £1.5 billion in 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.”

In a separate case, the Court of Appeal has concluded that councils can recover the costs of monitoring and enforcing driver conduct as part of the fees they charge for taxi driver licences.

This ruling is particularly significant as lack of clarity in the legislation has meant that many councils have not been recovering these enforcement costs and instead have subsidised them through other funds.

The LGA intervened in the case given the wider impact on councils and is pleased that a clear legal basis has now been established.

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