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Published by Scottish Council for Voluntary Organisations

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Landmark ruling sees OSCR's charity test fail

This news post is 10 months old

Court rules two trading subsidiaries should be registered as charities

A three-year battle by OSCR against a conservation trust has finally failed and could cost an estimated £650,000 to the public purse.

Scotland’s charity regulator has been pitched against New Lanark Trust, which runs New Lanark Village, a Unesco World Heritage Site, after it refused an application to recognise its two trading subsidiaries.

New Lanark Trust, New Lanark (Trading) Ltd and New Lanark (Hotels) Ltd, sought to be registered as charities in their own right but the regulator contested that the nature of their trading operations meant they couldn’t.

The Office of Scotland’s Charity Regulator (OSCR) believed a significant proportion of activities were “not in furtherance of charitable purposes and, as a result, the applicants did not meet the public benefit element of the charity test.”

While it accepted some activities met its test, such as maintenance of buildings and grounds of the site located beside the Falls of Clyde, this was outweighed by “solely commercial activities”, such as hotel accommodation offered to visitors and leisure facilities offered to residents and non-residents.

But an appeal in the Court of Session decided that the trading companies’ activities, while commercial in nature and generating revenue for the trust, fully contributed to the “bringing back and sustaining of life” in the village and ordered OSCR to include both companies in the register.

In a 17-page judgment issued last week, delivered by Lady Dorrian at the Court of Session, it said: “Stripped to their essentials the appeals are no more than disagreements with the Upper Tribunal’s conclusions on matters of fact, and they must be refused.”

New Lanark Trust now aims to recoup what it claims is £650,000 in lost revenue in non-domestic rates it has had to pay because charitable status wasn’t granted.

It said it will have talks with the Scottish Government and the local authority to reclaim rates paid since 2015.

Scott McCauley, New Lanark Trust chief executive, said: “This provides much-needed clarity to our legal and financial status. If and when the Trust is reimbursed it will provide a much-needed boost in difficult times.

“We are excited that all our visitors, whether they come to learn, stay, eat, or shop, will be directly supporting New Lanark and our charitable purposes.”

An OSCR spokesman said: “We note the decision of the Court of Session and have now registered New Lanark Hotels Limited and New Lanark Trading Limited as Scottish charities. The Court’s judgement rest on the facts in the case and emphasises the unusual (and almost unique) nature of the activities undertaken on the New Lanark World Heritage site.

“The OSCR’s intention in bringing the appeals was to clarify the position in respect of the assessment of public benefit in the charity test. We are pleased that the Court in its decision has done so and has clarified that charitable status for these companies is in accordance with OSCR’s public benefit guidance."



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Harman Scott
10 months ago

Well done New Lanark Trust! You were right in the way you operated, following charity rules, to maximise your assets to create profit for the benefit of the work of the charity. You knew more about the application of charity rules than the OSCR, and you were courageous and persistent in take this forward. You have clarified this in law not only for yourselves, but also for every other charity in Scotland. Executives at OSCR who negligently brought this action should be replaced immediately.