What the 2023 UK Court Ruling Means for Scientology

In 2013, the Church of Scientology won a landmark case in the UK’s Supreme Court and was authorised to conduct marriages at it’s London Org building at 146 Queen Victoria Street. The ruling redefined religion in British law and gave Scientology the freedom to conduct religious ceremonies at it’s UK premises, despite not being recognised as a tax-exempt religious group.

Following the ruling, the Church engaged in a decade-long legal battle with HM Revenue & Customs which finally came to a conclusion in January of this year. Despite the 2013 judgement, Scientology’s buildings were not automatically considered tax exempt as under British law, tax relief is determined by whether a religious building is a place of public worship.

A judge had previously ruled Scientology chapels were not eligible for tax relief, stating that although the Supreme Court decided they were a place of worship, it didn’t determine “whether that worship was public”. However, after an appeal to a specialist valuation tribunal it was concluded although the buildings were largely empty, the Church does “actively invites non-Scientologists” to take part in its services.

The judgement means Scientology’s buildings in the UK are now considered places of public worship and thus are “exempt from non-domestic rating”, a tax on properties not used for living accommodation.

Scientology has since requested refunds for tax paid to the UK government, stating in its most recent accounts filings “Following appeals against prior year rates demands on various Church buildings in the UK, two of the claims have been settled. [..] There are still outstanding claims to be settled, which due to the previous rulings by the courts in favour of the Church, will mean that further rates refunds will be made relating to prior years, but at the current time the amounts are unascertainable.“

Since its rejection by the Charity Commission in 1999, Scientology remains liable to pay Corporation Tax on its profits, which is currently set at 25% for a company of its size. In order to obtain full tax exemption the Church would need to appeal the Commission’s previous decision.

Judicial and public concerns

Under charity law, being a religious entity does not automatically grant tax exemption. In addition to the purpose of “advancing religion”, evidence is required of a clear public benefit – and this is something Scientology was unable to prove in 1999. The judgement stated that Scientology was “not established for the charitable purpose of promoting the moral or spiritual welfare and improvement of the community.”

Citing “judicial and public concerns which had been expressed about its beliefs and practices”, the Commissioners considered the “private conduct and nature” of Scientology auditing and training, and “their general lack of accessibility” to be evidence the benefits of the organisation were “personal as opposed to public” in nature.

However, with their buildings now considered places of public worship by the UK Courts, it is only a matter of time before Scientology attempt to overturn the Charity Commission’s decision and apply for charity status once again.

It is important to note that the 2023 case hinged on Scientology’s ‘Sunday Service’, one of only a handful of free, public services available in Scientology. Both announced and unannounced inspections were carried out before the ruling, with one report stating “since the opening of the London Church, it had become very rare for services to be conducted there at all. Even allowing for the time of day, the upper floors of the building appeared on our inspection to be largely unused, or at least distinctly under-used“

Despite having a small congregation, the simple fact Scientology’s Sunday Service is open to the public was integral to the case, and will undoubtedly form a vital part of it’s next bid for tax exemption.

Interestingly, two separate British court rulings concluded that the “religious worship” on offer at the Mormon Church is not “public,” and therefore they are taxable, reports online magazine Bitter Winter. In a policy strikingly similar to Scientology, only Mormons in good standing are admitted into LDS temples. In contrast, however, Mormon chapels are open to all and thus, regarded as tax-exempt in the UK.

In order for Scientology chapels to obtain the same status, they would need to prove that anybody is welcome to participate in worship at their properties. I would be interested to see whether a declared Suppressive Person (enemy of the church) would be able to freely attend a Sunday Service.

What does this mean for Scientology’s UK tax exemption?

Scientology currently operates in the United Kingdom under an Australian-registered charity, the ‘Church of Scientology Religious Education College Inc’ (COSRECI). It is currently operating with debts of over 5x its annual turnover, with $100 million in outstanding loan repayments due to its US counterparts. It’s previous application for charity status was made under a separate entity, Church of Scientology (England and Wales), which was registered in 1993 and remains an active shell company, reporting total assets of just £20 in 2021.

It is my suspicion Scientology are preparing a new application for charity status under this shell company and upon acceptance, would likely wind down COSRECI. This leaves us to question: what happens to the $100 million debt, and perhaps most worryingly, the $43.6 million (£34.2 million) COSRECI currently holds on account for undelivered services?

You can read the January 2023 court ruling in its entirety below.