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Its officials decided that religion is not always for “the public benefit” as it denied charitable status to the Plymouth Brethren, an exclusive Christian group, for one of its churches in Devon.
In a letter to the Plymouth Brethren, the watchdog set out its most recent decision that “there is no presumption that religion generally, or at any more specific level, is for the public benefit, even in the case of Christianity or the Church of England”.
The Charity Commission has been in a long running battle with independent schools over how they should get charitable status.
However, this is thought to be the first time it has denied the label to a religious group on the grounds that it does not advance public benefit.
The Plymouth Brethren, an evangelical movement whose 16,000 believers try to keep themselves separate from the outside world, have been in a lengthy fight with the watchdog over the issue.
The group has already appealed to the charity tribunal and is intending to take its battle to the European Court of Human Rights if necessary.
The letter emerged in evidence to the Public Administration Select Committee, which is investigating the work of the Charity Commission.
Some MPs are now concerned that the commission could start denying charitable status to a growing number of religious groups.
Charlie Elphicke, a member of the committee and the MP for Dover and Deal, believes the commission is “committed to the suppression of religion”.
At the hearing, he told the Plymouth Brethren elders that they were “the little guys being picked on to start off a whole series of other churches who will follow you there."
Lord Carey, the former Archbishop of Canterbury, has said he is a "very concerned" about the warning.