Commentary

B5.813 Entitlement to relief—established for charitable purposes

Business tax
Business tax | Commentary

B5.813 Entitlement to relief—established for charitable purposes

Business tax | Commentary

Determining charitable status

B5.813 Entitlement to relief—established for charitable purposes

In order to ascertain whether a trust or body of persons is entitled to relief as being established for charitable purposes only, the relevant documents must be construed.

Where the body of persons seeking exemption is a limited company, the memorandum of association of the company must be worded so as to determine whether it is established for charitable purposes only. The court is not concerned with the ultimate aims of the founders but solely with the meaning and effect of the language employed in the memorandum1, and neither the documents preliminary to the incorporation of the company, nor the actions of the directors after the company has been formed, can properly be received in evidence for the purpose of determining what the rights of the company may be2. These same principles apply equally to trust deeds3. Parol evidence may, however, be given to establish that a body of persons has purposes other than those set out in its written objects4.

If the main object of a trust or company is charitable and the trust deed or memorandum of association, as the case may be, contains other purposes which are in themselves non-charitable but are purely ancillary and secondary to the main object, the existence of these other purposes will not necessarily deprive the trust or organisation of its character of a charitable institution5.

The determination of what is the main object and what objects are purely ancillary is a question to

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