Not solely for charity

The taxpayer company was incorporated in 2001 and had been registered as a social landlord with the housing corporation since 2002. In that year the local authority transferred some of its housing stock to the company under the large scale voluntary transfer programme.

Later the company and the authority agreed that the latter would pay the former £104 million to carry out development work on the properties.

HMRC assessed the company to corporation tax. The company appealed to the First-tier Tribunal arguing that it had charitable status and the profits assessed were applied for charitable purposes. The tribunal dismissed the appeal so the company appealed to the Upper Tribunal (Tax and Chancery Chamber).

The Upper Tribunal found that the company’s main activity was intended to be the acquisition of housing stock its refurbishment and onward letting. But under its...