Rules on charitable status ‘vague and legally flawed’

Independent schools must prove they benefit children who cannot afford their fees in order to keep their status and the tax breaks that go with it.

The Commission brought in a new public benefit guidance test for assessing whether schools are sufficiently charitable and adequately help the less well-off but yesterday the Independent Schools Council (ISC) asked a tribunal to rule the test mis-stated the law.

The ISC represents eight organisations collectively educating half a million children in 1,260 schools and says the guidance is too narrow and does not take into account all the charitable work that schools are involved in.

Nigel Giffin QC, appearing for the ISC, told the tribunal at London’s High Court: “We say the test of whether you have done what is reasonable or appropriate in the circumstances is so vague and so uncertain that it leaves (school) trustees wholly unable to say with a reasonable degree of certainty what they must or must not do in order to avoid any breach of trust.”

As a consequence, the Commission “gets pulled in to second-guessing and micro-managing trustees’ decisions about how to carry out their duties and run the charity”.

Mr Giffin said: “The ISC has not brought these proceedings because it thinks that widening access to independent charitable schools is a bad thing or an unimportant thing.

“It is the position of my clients that widening access is an important and valuable thing.

“The practical problem that concerns many of its members is that, because of the Commission’s approach to what is a strict legal requirement, it has become very difficult – impossible even – for the trustees to know what they can or cannot do.

“Also the Commission has been drawn into, in effect, taking decisions for them in precisely the way the 1993 Charities Act says it is not its function to do.”

The ISC’s application for the public benefit guidance test to be quashed has come before the tribunal alongside a reference made by the Attorney General.

Two prep schools, which were among the first to be assessed, were failed because they were not providing enough bursaries.

Both were praised for working with the wider community and were subsequently able to keep their charitable status after increasing the number of bursaries available.

The legal challenge is expected to continue into next week.