Freemasons’ Grand Lodge Suffers Tax Defeat

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."

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BNP Defeated in £389,000 Will Dispute

In a case which has thrown up novel issues relating to wills and foreign donations to UK political parties, the British National Party (BNP) found itself in legal hot water after failing to convince the High Court that it was entitled to inherit £389,000 left to it by a British national who had lived abroad for almost 20 years.

When Joseph Robson (who was originally from Northumberland) died in Alicante, Spain, at the age of 81 in March 2010, he bequeathed his entire estate outside Spain – almost entirely made up of offshore investments - to the BNP. One of his sons received just £135 under the will and the other nothing.

However, the Court ruled that Mr Robson's will fell foul of the prohibition on foreign donations to UK-registered political parties – and that the BNP had broken the law by 'receiving' and 'accepting' the bequest in breach of the Political Parties, Elections and Referendums Act 2000. The Court effectively tore up Mr Robson's will, declared that he died intestate and awarded his estate to his sons.

There was no evidence that Mr Robson had been registered to vote in the UK at any time in the five years before his death and he was therefore not a 'permissible donor' to the BNP nor any other UK-registered political party, the Court found. He had not lived in Britain 'at any period after 1992' and exhaustive searches of the electoral rolls had failed to turn up his name. The possibility that he was registered to vote in England in the five years before he died was 'at best, highly unlikely'.

BNP officials had taken steps to change the terms of Mr Robson's will, by means of a deed of variation, so that his bequest would be paid into a trust, rather than directly to the party. However, the Court ruled that, by the taking of those steps, Mr Robson's gift had been inadvertently ‘accepted’ and ‘received’ by the BNP in breach of the Act, which contained 'penal provisions'.

Although Mr Robson's money had not been distributed by the executor of his estate pending the outcome of the case, the Court reached the 'inescapable conclusion' that the BNP 'had accepted the gift' before attempting to 'pass it over' to trustees. Mr Robson could not lawfully have made the gift, whether in his will or during his lifetime, and the BNP had not been entitled to accept or receive it.