Too Private to Be Charitable

Abstract

The precise circumstances in which conferral of private benefit will be consistent with charitable status and its associated fiscal benefits are difficult to define. A combination of both case law and legislative provisions – derived from trust law, charity law, and tax law – all work together in an attempt to ensure that an appropriate balance is struck. With a focus on the regulation of charities in England and Wales, through both the charity regulator, the Charity Commission for England and Wales, and the UK tax authority, Her Majesty’s Revenue and Customs, this chapter seeks to categorise and rationalise the situations in which the courts and regulators have drawn the line on private benefit. It is a question of fact and degree, which means that determining exactly where the line will be drawn in any given case is hard to predict with any certainty. The applicable principles are complex. Charities may find themselves falling foul of the ‘rules’ and the consequences of crossing the line on private benefit range from regulatory intervention, to restriction of tax relief, through to denial or removal of charitable status.