Mandatory charitable relief

For seven years after the commencement of development (the ‘clawback period’), a person who benefits from a charitable relief must inform the collecting authority where a disqualifying event happens. This must be done within 14 days of the disqualifying event. Where this is not done, a surcharge equal to 20% of the chargeable amount payable or £2,500, whichever is the lesser, may be applied.

A disqualifying event occurs is one or more of the following:

• change of purpose: the owner of the interest in the land in which relief was given ceases to be eligible for charitable relief i.e. the owner ceases to be a charitable institution or uses the building for an ineligible use
• change of ownership: the whole of the interest in the land in which relief was given is transferred to a person who is not eligible for charitable relief
• change of leasehold: the interest in the land in which relief was given is a lease and is terminated before the end of its term and the owner of the reversion is not eligible for charitable relief

Where a disqualifying event happens before commencement, the relief is cancelled and the full charge once more applies, unless a new claim by the charitable institution relief is submitted. If the disqualifying event occurs after commencement, the claimant’s share of the charge becomes due. In either instance, a revised liability notice must be issued showing what is payable and a demand notice must be served to collect the clawed back relief.

If a claimant does not inform the collecting authority in writing of a disqualifying event within 14 days of the disqualifying event occurring, they will immediately be liable to pay back the charitable relief and a surcharge.