Inland Revenue Commissioners v City of Glasgow Police Athletic Association
[1953] 1 All ER 747(Decision by: Lord Reid)
Inland Revenue Commissioners
v City of Glasgow Police Athletic Association
Judges:
Lord Normand
Lord Oaksey
Lord Morton of Henryton
Lord ReidLord Cohen
Judgment date: 9 March 1953
Decision by:
Lord Reid
My Lords, the respondents claim that they are entitled to exemption from income tax under the Finance Act, 1921, s 30, as amended by the Finance Act, 1927, s 24. It is admitted that if they are a "body of persons ... established for charitable purposes only" they are entitled to exemption, the other requirements of the section being satisfied.
The respondents' association was formed in 1938, apparently under official guidance. From then until 1947 membership of the association was a condition of service for all new entrants to the Glasgow Police Force. Compulsory membership was abolished in 1947, but it appears that all new entrants since that date have in fact become members. Membership is restricted to officers and ex-officers of the force: only a few ex-officers remain members and they give valuable service in coaching other members. Under the rules the management of the association is largely in the hands of senior officers of the force and all resolutions passed at meetings of the association are subject to the approval of the chief constable. The objects of the association, set out in r 2, are to encourage and promote all forms of athletic sports and general pastimes, and later rules show that this means to provide facilities for the members to take part in those activities and to encourage them to do so. The Special Commissioners have found that the association is regarded as an essential part of the police organisation, that it plays an important part in the maintenance of health, morale and esprit de corps within the police force, that it attracts recruits to the force and that it helps to induce members of the force to continue in the force rather than leave it. Those findings amply justify the conclusion that the existence and activities of the association increase the efficiency of the force generally and thereby directly benefit the public. I do not doubt that the purpose of increasing or maintaining the efficiency of a police force is a charitable purpose within the technical meaning of those words in English law. It appears to me to be well established that the purpose of increasing the efficiency of the army or a part of it is a charitable purpose. It may be that in some cases the facts hardly justified the conclusion that this was the purpose of the gift in question but that does not affect the principle. I can see no valid distinction between the importance or character of the public interest of maintaining the efficiency of the army and that of maintaining the efficiency of the police. But it is not enough that one of the purposes of a body of persons is charitable: the Act requires that it must be established for charitable purposes only. This does not mean that the sole effect of the activities of the body must be to promote charitable purposes, but it does mean that that must be its predominant object and that any benefits to its individual members of a non-charitable character which result from its activities must be of a subsidiary or incidental character.
It was argued that this association could not be regarded as established for charitable purposes because its revenue is all spent on activities in which its members alone take part. I am not satisfied that in every case that would be enough by itself to prevent the body from being held to be established for charitable purposes only and I prefer to base my opinion on the facts of this case.
The peculiarity of this case is that the same activities have a double result. They are beneficial to the public by increasing the efficiency of the force and they are beneficial to the members themselves in affording to them recreation and enjoyment: and all the relevant facts appear to me to indicate that the purpose was to produce this double result. It may well be that considerations of public interest were the primary cause of the association being established and maintained: but I think that it is clear that all or most of the activities of the association are designed in the first place to confer benefits on its members by affording to them recreation and enjoyment. It is only as a result of these benefits that the purpose of increasing the efficiency of the force is achieved. In some cases where the end is a charitable purpose the fact that the means to the end confer non-charitable benefits may not matter; but in the present case I have come to the conclusion that conferring such benefits on its members bulks so largely in the purposes and activities of this association that it cannot properly be said to be established for charitable purposes only. I, therefore, agree that the appeal should be allowed.
There is one other matter that I must notice. The First Division have held that they are not competent to decide what is a charitable purpose because that is purely a question of English law. In this I think that they were mistaken. It has commonly been accepted since Pemsel's case that the words "charity" and "charitable" in income tax legislation must be interpreted according to English law, but I do not think that that is a full or accurate statement of the position. In my judgment, holding that those words must be interpreted according to English law must mean that it is to be held that Parliament enacted that on that matter the law of England should also become the law of Scotland, and it must follow that Parliament must be held to have placed on the courts of Scotland the duty of administering what was formerly only the law of England but what has been made by Act of Parliament the law of both countries. It is true that this form of legislation by reference puts the Scottish courts in some difficulty because it may not always be easy for them to discover what are the principles to be applied in a particular case-incidentally that is not always easy even for an English court. But whatever the practical difficulties may be, and whether or not those difficulties were ever appreciated by Parliament or by this House in determining what Parliament must be held to have enacted, the fact remains that Parliament must be held to have required the Scottish courts to surmount those difficulties, and the duty so placed on the Scottish courts can now only be removed by legislation.