• In the case of Conservative Central Office v Burrell [1982] 1 WLR 522, the application of corporation tax on an unincorporated associations was explored and sui generis bodies, bodies of own class, with special laws were discussed.  

Facts of Conservative Central Office v Burrell [1982] 1 WLR 522

  • The Inland Revenue wanted to tax the conservative party
  • By wanting to do so, they argued the party was an unincorporated associated, and thus its profits were subject to corporation tax contrary to Corporation Taxes Act, section 238(1)

Issues in Conservative Central Office v Burrell [1982] 1 WLR 522

  • Was the conservative party an unincorporated association, and therefore its profits subject to tax?

Held by the Court of Appeal

  • Appeal dismissed by all three judges as the conservative party was not seen to be within the definition of an ‘incorporated associated’. Therefore it could not be taxed by HMRC.

Lord Justice Lawton

  • In general, Lord Justice Lawton (with Lord Justice Brightman’s support) believed that no such unincorporated association as the one claimed here existed
  • “however viable such a body may be as a political movement, it lacks the characteristics of an unincorporated association for the purposes of the taxing statutes. There are no mutual understandings between all the members, no mutual rights and obligations and no rules governing control where it clearly lies, which is in the leader.” [527]
  • “The indications are that the separate bodies which make up the party co-operate with each other for political purposes but maintain independent existences for organisation purposes.” [528]

Lord Justice Brightman

  • Lord Justice Brightman, in explaining why he dismissed the appeal, broke down the stages of what the present situation appeared to be – not an unincorporated association, but instead agency and mandate
  • “No legal problem arises if a contributor (as I will call him) hands to a friend (whom I will call “the recipient”) a sum of money to be applied by the recipient for political purposes indicated by the contributor, or to be chosen at the discretion of the recipient. That would be a simple case of mandate or agency … the recipient is the treasurer of an organisation which receives and applies funds from multifarious sources for certain political purposes … the treasurer has clear authority to add the contribution to the mixed fund (as I will call it) that he holds. At that stage I think the mandate becomes irrevocable.” [529]
  • “So in the present case it seems to me that the status of a contribution to the Conservative Party Central Funds is this. The contributor draws a cheque (for example) in favour of, or hands it to, the treasurers. The treasurers are impliedly authorised by the contributor to present the cheque for encashment and to add the contribution to Central Office funds. Central Office funds are the subject matter of a mandate which permits them to be used for the purposes of the party as directed by the leader of the party” [530]
  • “I see no legal difficulty in the mandate theory. It is not necessary to invent an unincorporated association in order to explain the situation.” [530]