Derby Teaching Hospitals NHS Foundation Trust* and 16 other NHS Foundation Trusts have lost their legal case against Derby City Council and 44 other Local Authorities over the payment of non-domestic business rates.
The case rested on the preliminary issue of whether the Foundation Trust is a charity. Under the terms of the Local Government Finance Act 1988, charities are entitled to an 80% reduction in business rates. The Trusts had claimed they should be treated as charities and wanted to claim tax rebates for mandatory relief backdated to April 2010, which could cost local councils and government as much as £2.35 billion.
However, Mr Justice Morgan ruled that a Foundation Trust is not a charity. He set a deadline of February 24 for the Trusts to appeal.
If successful, this case would have set a precedent for other Trusts and public services. Real estate advisor, Altus Group, advises that the legal challenge could have saved NHS hospitals £292.95 million per year, but at a cost to another section of the public purse.
A spokesperson for the Local Government Association (LGA) said: "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% relief going forward."
* Now University Hospitals of Derby and Burton Foundation Trust
