This is crazy. :-/ Where to start?
First, fundamentally, the aim of pretty much everything is to
increase knowledge. Teaching/education is merely a means to
communicate that to people, which is something that an encyclopaedia
natively does. To say that producing an encyclopaedia does not
advance education - especially considering that this is Wikipedia,
which has a huge impact - is simply wrong.
Second, learning how to write an encyclopaedia - something that
everyone who contributes to Wikipedia does - is inherently an
educational experience. To support that naturally supports the
advancement of education. To quote a law from 1957 - over 50 years
ago - simply shows how out of date the law, and hence the goverment,
is in this respect.
Third, we're not all about Wikipedia. We're about the Wikimedia
Movement, or even more generally, the free culture movement. That
incorporates a much wider range of projects, including Wikiversity
whose aim is explicitly to educate people, and a load of other
projects that do this to a lesser extent.
Fourth, stating that "the support the Wikipedia" is "the stated
primary purpose of Wiki UK Ltd" is simply wrong; where does it even
mention "Wikipedia" in our MoA/AoA?
(There are more points, but I'm too tired right now to phrase them
coherently...)
We should definitely respond to HMRC about this; getting lawyers
involved seems to be a very good idea. Is it worth contacting
LawWorks regarding this?
If we don't get anywhere with HMRC, then we should take this to the
media - they'll have a field day with this.
Mike
On 24 Apr 2009, at 21:59, Andrew Turvey wrote:
Dear All,
Yesterday we received a letter from the UK Tax Authorities
rejecting our application for recognition as a charity. Citing a
legal precedent, they stated that "the production of an
encyclopaedia is not the charitable advancement of education" and
therefore we were not established for exclusively charitable
purposes. The ruling they gave stated that "If the object be the
mere increase of knowledge it is not in itself a charitable object
unless it is combined with teaching or education".
The full letter from the HMRC is copied below with some explanatory
notes added in { }
Their objection goes to the heart of what we have been established
to do. On the surface, it does not appear that any different
wording in our constitution or correspondence would have given us a
different outcome. Nonetheless, the legal issues may be arguable -
our job is not just to produce content in isolation, but also to
spread that knowledge and make it accessible to all. I should
imagine this will come down to the finer points of law, and it is
probably best to engage a lawyer at this stage when we appeal.
If we had applied to the Charity Commission before HMRC the
application would have been considered by different lawyers but the
same law would apply. Therefore, it is likely that we would have
come up against the same problem.
I'm contacting the Foundation to ask them if they are aware of any
lawyers familiar with UK law who could help us pro-bono on this.
I'm also sending a note to our MP to thank him for his help in
speeding this up: although it is disappointed to get this response,
it is better to get it now that in 3 or 6 months' time.
In the meantime, we should probably stop referring to ourselves as
a "charity" or an "exempt charity". Before receiving this letter it
was reasonable for us to do this as that was our honest view. Now
we know there is some disagreement over this, I suggest we should
describe ourselves as a "not-for-profit" instead. Whilst we can
still get Gift Aid declarations (HMRC have previously confirmed
this was ok) we should probably add a caveat on the form explaining
that our charitable status is contested.
Regards,
Andrew Turvey
Secretary, Wikimedia UK
=========================
Company Secretary
Wikimedia UK
23 Cartwright Way
Beeston
Nottingham NG9 1RL
Date: 17 April 2009
Dear Mr Turvey,
Wiki UK Limited (operating name Wikimedia UK)
Thank you for your letter of 4 March 2009 and enclosures. I am
sorry for the delay in replying.
I am aware that you have written to Nick Palmer MP {regarding
delays in responding} - a reply to that letter will be sent
separately to Nick Palmer MP.
The definition of a charitable company for tax purposes is
contained at Section 506(1) Income and Corporation Taxes Act 1988
which states " 'charitable company' means any body of persons
established for charitable purposes only". However, the
determination of charitable status is a matter of general law.
To be a charity in law it is not sufficient that a company's
activities or intended activities are charitable. The memorandum
and articles of association of the company must declare objects
that are charitable in law and be otherwise in acceptable
charitable form so that the company could only carry out charitable
activities.
The objects of Wiki UK Ltd are stated at clause 3 of its memorandum
of association:
"The charity's Object is to aid and encourage people to collect,
develop and effectively disseminate knowledge and other
educational, cultural and historic content in the public domain or
under a license that allows everyone to freely use, distribute and
modify content, by means including (but not limited to):
[9 ways are them listed - for example 'acting as a voice and
representative for the community of UK residents and citizens who
use and edit such repositories'] "
In your letters of 23 November 2008 and 4 March 2009 you state that
the primary purpose of setting up the company is to support the
'Wikipedia' website. {We actually said "support the “Wikipedia”
website and the other projects of the Wikimedia Foundation, in ways
that are compatible with UK charity law"}
The stated objects are not charitable in law. The production of an
encyclopaedia is not the charitable advancement of of education and
has not been accepted as such in law. In Re Shaw [1957] 1 WLR 729
Mr Justice Harman said "If the object be the mere increase of
knowledge it is not in itself a charitable object unless it is
combined with teaching or education". Nor is the support the
Wikipedia, the stated primary purpose of Wiki UK Ltd, a charitable
purpose.
Wiki UK Ltd is not established for charitable purposes only as
required by the legislation and so is not a charity for tax
purposes. The charity tax examptions and reliefs (including Gift
Aid tax relief) are not, therefore, available to Wiki UK Ltd.
To help us improve customer service, please quote our reference
number and provide a daytime telephone number in any correspondence.
Yours sincerely,
Higher Officer, Technical