Hospitals' £1.5bn rate rebate claim rejected by High Court

NHS trusts argued their work should qualify them as charities

A case that could have seen NHS trusts receive £1.5bn in business rate refunds has been rejected by the High Court.

The case led by University Hospitals of Derby and Burton (UHDB) NHS Foundation Trust argued they and other trusts should be treated as charities and given an 80% reduction in rates.

Mr Justice Morgan said they were "not established for charitable purposes only".

The Local Government Association (LGA) welcomed the ruling.

The action was led by Derby's NHS trust against the local city council

Though private hospitals registered as charities can apply to receive an 80% rebate, the NHS has to pay business rates on its properties.

During the court hearing Christopher Tidmarsh QC, representing UHDB and 16 other trusts, said the goods and services they provided "could easily be constituted as a charity".

Speaking on behalf of the local authorities, Amanda Tipples QC said the claims were "exceptional" and had not been made before in the 70-year history of the health service.

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Mr Justice Morgan said UHDB was looking to recoup more than £17m from Derby City Council, adding: "If every foundation trust in the country were to claim repayment of the rates it had paid in the last six years, the sums involved would be very significant."

The LGA said the ruling "is good news for councils and the local services our communities rely on across the country".

"Business rates, alongside council tax, are an extremely important source of income for local government so this would have huge implications for residents and the vital local services they rely on," they added.

Kevin Downs, UHDB's executive director of finance and performance, said it will "take further advice" from the legal team representing the trusts before deciding on the "next steps".