Britain’s Freemasons will be deeply disappointed by a tax tribunal’s ruling that their governing Grand Lodge is not sufficiently ‘philosophical’ or ‘philanthropic’ to qualify for a VAT exemption potentially worth millions.
The United Grand Lodge of England represents about 250,000 Masons, belonging to around 8,000 lodges, and in 2010 alone donated more than £80 million to various charitable causes. The body says that Freemasonry’s ‘peculiar system of morality, veiled in allegory and illustrated by symbols’ is driven by fundamental principles of ‘brotherly love’, high moral standards, charitable relief and a quest for the truth.
It sought a substantial rebate from HM Revenue and Customs (HMRC) in respect of more than 20 years in which VAT was accounted for on members’ annual subscriptions. That was on the basis that its ‘aims of a philosophical, philanthropic and civic nature’ benefited the public in general and that the subscriptions were thus exempt by operation of Article 13(1) of the Principal VAT Directive 2006.
However, in dismissing the appeal, the First-tier Tribunal (FTT) noted that only 25-30 per cent of charitable donations made by the Grand Lodge went to those without any Masonic connection. The balance was used to benefit distressed Freemasons or their dependents.
The FTT observed, “It is not that benefiting others who happen to be Masons does not display goodwill towards mankind in general, but that if that is coupled with a hope or expectation of personal benefit, some of the aim loses its quality of benevolence. To the extent that monies were paid with the hope or expectation of self-insurance, their payment does not seem to us to be an act of philanthropy. The aim of encouraging such giving does not appear to be a philanthropic aim.”
The Grand Lodge argued that, particularly since 2000, Freemasonry had become increasingly open and ‘ever more visible’. Beneficiaries of its charitable largesse included the Royal College of Surgeons, Help the Hospices, the Red Cross and the air ambulance service and members were expected to play an active and positive role in the communities in which they lived.
However, The FTT found that the promotion of the teachings, ceremonies and rituals of Freemasonry had remained one of the Grand Lodge’s primary aims, as well as the ‘encouragement of fraternity, self-improvement and mutual care’ among its members.
The FTT concluded, “We accept that, included among the Grand Lodge’s aims, are those of philosophical, philanthropic and, to some smaller extent, civic nature. But it has other aims as well. To some extent the pattern of the distribution of the charitable spend by the Masonic charities suggested to us at least the vestiges of mutual insurance – the care for Masons and their dependents. Thus there was some element reflecting an aim of encouraging mutual benevolence, which we do not regard as wholly philanthropic.”