Tuesday, 14 July 2009

Why doesn't the school just tell them to piss off?

From the BBC:

Independent schools in England are protesting about "too narrow" rules for charitable status - as two out of five test-case schools fail to qualify. The loss of charitable status threatens tax benefits for independent schools (1). The Independent Schools Council says the rulings rely too much on the number of bursaries, with fees likely to have to rise to fund subsidised places. The Charity Commission says charities must "demonstrate how they bring real benefit to the public" (2).

The publication of the rulings is the latest stage in determining how fee-paying schools can retain charitable status. The refusal of this status for two of the first test-case schools - St Anselm's in Derbyshire and Highfield Priory, near Preston, Lancashire - has angered the independent school sector.

(1) Taking St Anselm's School, for example: it has 250 pupils, and its 2008 accounts show total income of £3,590,405 (average school fees £14,362 per pupil) with a group profit before tax of £352,468. If it didn't have charitable status, it would have to pay around £70,000 in corporation tax. So the price of telling the meddlers to piss off would be around £280 per pupil, which would free them from a lot of other admin and hassle as well.

(2) How can private schools, however expensive or snobby, not be of direct and immediate "benefit to the public", simply by dint of the fact that those pupils aren't asking for a tax-payer funded place at a state school? And don't forget that "[a]ccording to Lord Macnaghten, to be charitable, a trust must be either for:
• The relief of poverty;
• The advancement of education;
• The advancement of religion; or
• Other purposes beneficial to the community."

Is the Charities Commission seriously contending that this or any other school is not primarily for "the advancement of education"?

Of course, once I'm in charge, there won't be any tax breaks for charities, but the education vouchers will sure as heck be worth more than £280 per pupil.


Anonymous said...

You have to recognise that the latest blitz by the Charity Commission has absolutely nothing to do with public benefit or improving education. It is simply about the politics of envy and spite which characterises the core beliefs of the Labour Party. It will be interesting to see how the new public benefit test is applied to all charities. Having recently been involved in a social enterprise it is clear that the majority of initiatives now actively discriminate against the white working class and middle class families - the constant collection of data about one's ethnic, social, sexual and educational background and/or orientation is a disgrace. This latest attempt to attack the independent educational sector is just another step towards trying to level things down rather than celebrte and build on the rich heritage provided by this sector.

banned said...

It is about more than paying Corporation Tax and VAT. If a school loses it's charitable status the Board Of Governors or Trustees become criminals for acting outside the 'constitution' of their Trusteeship unless they resign en masse leaving the school in a legal limbo ripe for State takeover.


John of Enfield said...

The head f the Charity Commission admitted she was a member of the Labour Party on Radio 4 this morning.

This has nothing to do with

a) The Charitable status of private schools.
b) the charitable status of Demos & other political "charities".
c) The charitable status of organisations whose main income comes from the public sector.

New Labour is shameless.

Witterings From Witney said...

With all the fake charities that abound, do the Charity Commissioners actually know the definition of the word 'charity'?

roym said...

some charities are better than others?

hardly think and extra 280 notes per year is going to break the bank.

Henry North London said...

Its all about the government wanting to control things

James Higham said...

This is the juggling act we always had to do [I was a prep school head as you might know] but it seems to have bcome vastly more complicated now. This definition of 'charitable' is a worry.

sobers said...

I suspect there's more to it than just paying the tax on any profits. The whole set of buildings and grounds will probably be owned by the charity. If the charity is dissolved and a new private organisation is set up to run the school, the new school would have to buy the property from the charity, or rent it, at market rates. If it were merely a case of making no profit and/or paying corporation tax, I suspect many schools would have taken that option.

This is of course a purely political attack on private schools by NuLabour, by using a politically appointed head of the Charity Commission as a cats paw.

Bruce said...

Yet only yesterday, the top education news story was that some areas are short on primarily school places.. and according the BBC Online "rising birth rates and the recession reducing numbers in private education are being blamed."

Mark Wadsworth said...

Anon, JoE, HNL, exactly.

Banned, VAT has nothing to do with it, such education services being clearly exempt.

WFW, clearly not (see Lord McNaghten's list).

Roym, what extra £280 notes? I assume the school is charging market value for school fees (so it can't/won't put them up), all this means is that it will take them five years to save up for the new (sports hall, language lab, IT centre, whatever) rather than four. Big deal, frankly.

JH, no I didn't know that.

Sobers, the owning entity (in this case a company limited by guarantee) itself is NOT a charity (some schools are owned by unincorporated trusts, for example), the gimmick is that profits from 'charitable activities' are exempt (whatever the legal status).

For example, if the school hired out its premises as conference facilities in the summer holidays, this would be normal taxable trading income, which would not make the educational bit non-charitable all of a sudden. The nightmare scenario you envisage is not going to happen.

Anonymous said...

The independent schools need to wake up and tell the State where to shove it.

They can never win. If they pass this test, the bar will be raised higher and higher, until - if they remain "charitable" they will be hedged about with so many restrictions on what they can do, and so many conditions attached to their use of their own property (e.g. handing over their expensive facilities for chavs to wreck), that they might as well be State schools.

Tell them to piss off. Become free. Now.