The Supreme Court having decided in  R (Hodkin & Anor) v Registrar-General of Births, Deaths and Marriages [2013] UKSC 77 that Scientology was a religion, the issue came up again recently in relation to Freemasonry – this time at a much lower level in the system. In this case, however, the First-tier Tribunal Tax Chamber took the view that it was not.

Background

The United Grand Lodge of England is an unincorporated association of what might be termed “traditional” Freemasons. In United Grand Lodge of England v Revenue & Customs [2014] UKFTT 164 (TC) it appealed against HMRC’s decision of 6 April 2010 that its supplies to its members in return for their subscriptions were not exempt from VAT. The decision in dispute related to output tax accounted for since 1977 [para 98].

Article 132(1) of the Principal VAT Directive 2006/112 on the common system of value added tax (which replaced Article 13A(1) of the Sixth VAT Directive 77/388/EEC) requires member states to exempt, inter alia:

“… the supply of services, and the supply of goods closely linked thereto, to their members in their common interest in return for a subscription fixed in accordance with their rules by non-profit making organisations with aims of a political, trade union, religious, patriotic, philosophical, philanthropic or civic nature provided such exemption is not likely to cause distortion of competition.”

It was common ground that the Grand Lodge was a non-profit making institution whose supplies were in its members’ common interest in return for subscriptions fixed in accordance with its rules; and HMRC did not argue that an exemption would distort competition [para 6].

The Grand Lodge contended that its aims were of a philosophical, philanthropic or civic nature. At the request of the Tribunal, however, both parties also made written submissions as whether or not the Grand Lodge’s aims might be of a religious nature [para 7]. There had been no need to address the domestic legislation [para 8] since HMRC applies the Directive directly.

The First-tier Tribunal concluded that the aims of the Grand Lodge were as follows:

“(1) promoting a particular system of morality which:

(a) required belief in a supreme being,

(b) required commitment to the Grand Principles of integrity, brotherly love and charity; and

(c) was taught in allegory as well as directly;

(2) promoting behaviour consistent with that system and which inculcated due obedience to the law;

(3) bringing men together to practise that system:

(4) aiding the cohesion in mutual fellowship and acquaintance of its members through common ceremony and social intercourse; and

(5) administering charitable funds (and their distribution) consistently with these aims” [para 111].

Might the aims of Freemasonry be religious?

As noted above, at the end of the oral hearing the Tribunal had invited written submissions from the parties on whether or not the Grand Lodge’s aims could be of a religious nature. The Tribunal therefore turned to what it described as “the expansive definition” of religion [para 117] in Article 10(1)(b) of Directive 2004/83/EC:

“(b) the concept of religion shall in particular include the holding of theistic, non-theistic and atheistic beliefs, the participation in, or abstention from, formal worship in private or in public, either alone or in community with others, other religious acts or expressions of view, or forms of personal or communal conduct based on or mandated by any  religious  belief; “

The Tribunal cited Lord Toulson’s opinion in Hodkin [at 57] that religion might be described as

“a spiritual or non-secular belief system, held by a group of adherents, which claims to explain mankind’s place in the universe and relationship with the infinite, and to teach its adherents how they are to live their lives in conformity with the spiritual understanding associated with the belief system. By spiritual or non-secular I mean a belief system which goes beyond that which can be perceived by the senses or ascertained by the application of science. I prefer not to use the word ‘supernatural’ to express this element, because it is a loaded word which can carry a variety of connotations. Such a belief system may or may not involve belief in a supreme being, but it does involve a belief that there is more to be understood about mankind’s nature and relationship to the universe than can be gained from the senses or from science”.

The Tribunal conceded that the Grand Principles of integrity, brotherly love and charity were intelligible and concerned important matters. It also noted that the Principles were taught in the language of allegory and metaphor and that there was a belief in the supernatural [para 125]. However, when tested against the criteria of belief in a supernatural being and the acceptance of conduct to give effect to that belief,

“it seems that Freemasonry – just – falls short. That is because (i) as we understand those criteria the supernatural being is the same for all adherents, whereas the nature of the supernatural being accepted by Freemasons may differ according to their particular faith; and (ii) the canons of conduct promoted by Freemasonry are freestanding and not adopted to give effect to the belief” [para 126].

Similar considerations applied to Lord Toulson’s definition in Hodkin:

“Whilst Freemasonry requires belief in a supreme being and teaches its adherents how to live their lives, that rule of life did not, on the evidence before us, arise in conformity with a spiritual understanding but by reason, in part through ritual, of a code of behaviour. Its moral system did not arise from and was not adequately connected with a non-secular or spiritual understanding of man’s relationship with the universe” [para 129].

In short, the Tribunal concluded that the Grand Lodge did not have “any significant aims of a religious nature” [para 130].

Does Freemasonry have aims of a philosophical nature?

The Tribunal cited with approval Lord Denning MR’s statement in R v Registrar General ex parte Segerdal [1970] 2 QB 697 that Scientology was “more of a philosophy … rather than a religion” and that its services were instructions on philosophy:

“Although Lord Denning was not construing an EU Directive, this gives us some comfort that the meaning of philosophy as a rule of life is not rare or arcane and is a potentially fair meaning of the word” [para 135].

The Tribunal concluded that a body whose aims were to promote or practise a rule of life was capable of having philosophical aims for the purpose of Art 132(1)(l) [para 139]; however, in order for a rule of life to qualify there had to be some public interest in the exemption [para 140]. Though the Grand Principles were generally-accepted norms of good behaviour that fact did not prevent them from being a philosophy [para 141]; and the Tribunal concluded that the aims of the Grand Lodge included aims of a philosophical nature [para 143]. Moreover:

“If we have misinterpreted the meaning of ‘philosophical’ we would have found that ‘religious’ was wide enough to encompass the tenets of Freemasonry” [para 143].

Does Freemasonry have aims of a philanthropic nature?

The Tribunal accepted that one of the fundamental aims and responsibilities of Freemasonry was the provision of time and money for relief [para 147]: the question was whether or not that aim was philanthropic [para 149]. Given the proportion of charitable funds that was expended on masons and their dependents, the Tribunal concluded that not all the Grand Lodge’s promotion of charitable giving could be treated as having a philanthropic aim [para 156].

Does Freemasonry have aims of a civic nature?

In Expert Witness Institute v Customs and Excise Commissioners [2002] STC 42 Longmore LJ stated [at para 36] that for a body to have aims of a civic nature it “must have objects which promote the relationship of citizens, not among themselves, but with the state of which they are citizens.” On that test, the Grand Lodge could not be said to have such aims:

“The charitable activities of Freemasons were largely unrelated to any relationship of citizens with the state, the fellowship and ritual enjoyed by Freemasons had nothing to do with the state, and acceptance of, and living by, the three Grand Principles touched only slightly on a person’s relationship with the state [para 161].

Conclusion

The Tribunal accepted that the Grand Lodge’s aims included those of a philosophical, philanthropic and, to some smaller extent, of a civic nature [para 167]. But it also had other aims, such as social intercourse [para 168]. Moreover, the pattern of the Masonic charities’ disbursements had at least the vestiges of mutual insurance – the care of masons and their dependents:

“Thus there was some element reflecting an aim of encouraging mutual benevolence, which we do not regard as wholly philanthropic” [para 169].

The Grand Lodge’s aims included both service to the community on the one hand and fostering fellowship for its own sake and care for other masons on the other [para 170]. Whether or not its aims fell within Art 132 (1)(l) depended on the extent to which its other aims were minor or ancillary to the qualifying aims [para 171] – and the Tribunal decided that they were not. Even after 2000, when Freemasonry had become more outward-looking, the aims of encouraging fraternity, self-improvement and mutual care were still more than merely incidental or ancillary to the philanthropic, philosophical and civic aims of the Grand Lodge [para 173].

Appeal dismissed.

Comment

Though the Tribunal quoted Lord Toulson’s disclaimer at the end of para 57 of his judgment in Hodkin that “this is intended to be a description and not a definitive formula”, it is pretty clear that his “description” is in the process of being transmuted into a definitive formula regardless of his disclaimer – at least until a better one comes along.

In addition, having asked the parties for written submissions on the issue of religion after the oral hearing, the Tribunal’s subsequent handling of the issue of “religion” appears slightly ambivalent. On the one hand, it concludes at para 126 that Freemasonry “just” falls short of meeting the definition of “religion”.  On the other, at para 143 it backs up its conclusion that the aims of Freemasonry are in part “philosophical” on the basis that if that conclusion is wrong “we would have found that ‘religious’ was wide enough to encompass the tenets of Freemasonry” [para 143].

To which the response must surely be, “But hang on: you can’t have it both ways. Something is either ‘religious’ for the purposes of Article 132(1) or it’s not: ‘religion’ isn’t simply a substitute for ‘philosophy’, nor ‘philosophy’ for ‘religion'”.