The charity tax exemption of publishers Oxford University Press is coming under increasing fire from rival companies after a change in regulations.

From April 1 this year all charities must show their activities have a clear "public benefit".

They will have to report back to the Charity Commission on the "benefit" requirement from March 2009 Now rivals of both Oxford University Press (OUP) and the much smaller Cambridge University Press (CUP) are responding to the rule change by complaining of the perceived lack of a "level playing field".

Among them is the small publisher of English language teaching (ELT) textbooks and aids, Summertown Publishing, which operates with five staff just along Walton Street from the head office of OUP - the world's largest publisher of British English ELT materials.

Former journalist and bookseller Louis Garnade started Summertown Publishing some ten years ago. Now Singapore-based Times Publishing has bought up the business through its UK subsidiary Marshall Cavadish.

Mr Garnade said: "Of course it is not a level playing field. OUP's tax exemption gives it the upper hand time and time again. It is unfair. It would make life a lot easier for all of us if the exemption were removed."

He added: "A couple of generations ago you might have been able to say that profits from selling bibles were used to subsidise worthy academic publishing which would never make a profit.

"But those days are long gone. In a way ELT books are its present-day bibles."

OUP started as a printer back in the 15th century but Archbishop Laud brought it fully under the University's control in the 1630s when it obtained a licence to print bibles - in those days tantamount to a licence to print money.

Mr Garnade, 79, has been in the bookselling and publishing business for many years. He pointed out that the issue of using profitable puiblishing to subsidise small but worthy print-runs was brought to a head ten years ago (in 1998) when OUP dropped the poetry list - amid much opposition, not least from Oxford dons -on the grounds that it was unprofitable.

OUP, the largest university press in the world - larger than all the American university presses and the CUP combined - is managed by elected delegates currently headed by Dr Henry Reece.

In 2006/7 it made a surplus (charities make supluses not profits) of £75.1m, up from £72.5m the previous year, and employed 4,700 people worldwide.

It contributed £26.6m to the university's coffers in 2006/7 with a further special transfer of £20m OUP derives its tax exemption through proclaiming itself to be a department of Oxford University, which, as an educational establishment, has charity status without being registered as such with the Charity Commission.

But is the writing now on the wall for that tax exemption? After all, if publishing ELT books, or children's books, or dictionaries, come to that, is a charitable activity for OUP, bringing "public benefit", why is it not so when rival organisations perform exactly the same function?

The Bookseller magazine last month quoted an unnamed managing director of an academic publisher saying that OUP and CUP were "overtly commercial in nature," adding: "It certainly is an unfair advantage. Because of their charitable status, both OUP and CUP are able to publish monographs at a much lower price than us."

OUP spokesman Rachel Goode confirmed OUP's charity status derived from the fact that it was a department of Oxford University - and therefore not a commercial organisation (though, interestingly enough, her email address ends in .com not .ac as would be the case with other departments.) But how much difference to OUP's business would the loss of charitable status make? After all, it has already lost it in other countries in which it operates, notably India.

And it was in India that Dr Henry Reece, secretary to the delegates of OUP (who in any other business would these days be called the chief executive), floated the idea that OUP could simply covenant its surpluses to the university and avoid tax that way.

Dr Reece told The Oxford Times: "OUP is a department of Oxford University, which means several things. We dont have a separate legal status from the university and therefore questions of public benefit relate to the university as a whole.

"We also benefit from the university's charitable status in the UK because we fulfil the university's mission.

"But more important, being a department of Oxford University, and therefore enjoying charitable status, is a clear statement of who we are. It drives our mission, which is to further the university's objective of excellence in research, scholarship, and education by publishing worldwide.

"All of our publishing activities support this mission, from publishing scholarly monographs to primary school books.

"And because we strive to operate in a business-like way - effectively and efficiently - in pursuit of our mission, any surplus we may make is available to the wider university, and also allows us to invest in major scholarly projects, such as the Oxford English Dictionary."

But the fact remains that OUP finds itself in a curious position: operating a commercial operation on the one hand and a university department, producing scholarly works, on the other. No one would comment on the e-mail suffix!