Guidance on how private schools justify their charitable status must be partly scrapped following a court ruling, it has been revealed.
The Charity Commission has been told it must withdraw some of its guidelines, or face having them quashed.
The move comes just weeks after the Upper Tribunal ruled that parts of the Commission's guidance were "erroneous".
The Independent Schools Council (ISC) had brought a case against the Commission arguing that its guidance must be quashed because it was too vague, and claimed the commission was guilty of "micro-managing" individual charities.
The commission had argued that its guidelines were clear and it had only provided "supportive assistance" to help charity trustees keep their charitable status.
At a hearing in October, Mr Justice Warren, president of the Upper Tribunal (Tax and Chancery Chamber), sitting with Judge Alison McKenna and Judge Elizabeth Ovey, ruled that the guidance "should be corrected". The panel concluded that parts of the guidance were "erroneous".
The tribunal members said they had "every sympathy" with the Charity Commission "in the difficulty of the task it faced in producing guidance on this area of the law".
Following the ruling, the parties were asked to agree on how the guidance should be changed.
As an agreement was not reached, there was another hearing on Friday to determine whether the parts of the guidance challenged by the ISC should be quashed and rewritten, or amended.
It is understood that the Commission has been told to withdraw parts of its guidance, specifically that relating to public benefit and fee-charging charities, which includes independent schools. If it does not do so within 21 days, it could face having these parts quashed.