Merton Council takes rates dispute with Nuffield Health to the Supreme Court

Gym and wellbeing chain Nuffield Health isn’t entitled to a relief from non-domestic rates for its centre in Merton Abbey, SW19, because the premises aren’t entirely used for charitable purposes, a lawyer representing Merton Council told the Supreme Court today. This is the first day of a two-day hearing in a case that could have implications for gym chains and businesses that operate as charities across the country. The long-running case centres on Nuffield’s Merton Abbey complex, which it bought from Virgin Active in 2016. Nuffield Health, which runs more than 100 fitness centres, is a registered charity established “to advance, promote and maintain health and healthcare of all descriptions and to prevent, relieve and cure sickness and ill health of any kind, all for the public benefit”. Charities are entitled to an 80% reduction from non-domestic rates on premises that are used wholly or mainly for charitable purposes. After buying the Merton Abbey centre, Nuffield Health applied for the relief. However, it was withdrawn after a visit from the council because the inspector found the centre wasn’t being used wholly or mainly for charitable purposes. Nuffield challenged the decision and won in the High Court, which found that the health club was entitled to the discount. The council appealed the decision, and later lost on a majority ruling in the Court of Appeal. However, at today’s hearing Merton Council’s lawyer, James Goudie KC, said judges at the Court of Appeal had erred. He said, while it was true that Nuffield Health is a charity, the building itself isn’t wholly or mostly used for charitable purposes because it isn’t wholly or mostly used for the public benefit. The facilities are “primarily for Nuffield gym club members,” who pay almost £1,000 a year. “There’s no scheme for reduced membership fees and the membership fees are too expensive for those of modest means,” he said. “Such services available to non members are very limited… and beyond the reception desk, facilities can be accessed only by passcode. “Not being in breach of charity law is not sufficient to provide and exemption from rating law,” he said. The hearing is scheduled to last two days with a judgment published at a later date. London Borough of Merton Council (Appellant) v Nuffield Health Ltd (Respondent) Supreme Court; Hearing dates 7-8 March 2023