Overview: Coming out fighting

Without warning, HM Revenue & Customs has withdrawn a key VAT concession
for charities. Keith Hickey, chief executive of the Charity Finance Directors
Group immediately went on the offensive announcing he would campaign for a
reversal of the policy. He faces a difficult task.

What’s happened
Last week Accountancy Age revealed that the taxman has decided, without
prior consultation, that it would remove a concession that let charities off VAT
on the acquisition or construction of a property. Experts rushed to complain.
The announcement, they said, had come out of the blue and would have a
devastating effect on the charity sector.

Indeed, there was no shortage of people willing to complain, including the FD

of Banardo’s who said it would have widespread financial implications for the
charities’ development.

Hickey emerged as the figure not only willing to complain but also tell HMRC
that the policy had to be reversed. Of course, the taxman is always receiving
complaints but deciding to go head to head with HMRC is another matter.

The department is stubborn and determined. And, while publicly it engages
with debate, many complain that once its mind is made up it is very difficult to
budge.
HMRC management has also undergone an attitude change over the past couple of
years. It has become more forceful in its attitude towards taxpayers and more
emphatic in its decision making, but failing to undertake consultation is a step
back for the taxman, which has been praised for entering dialogue more often.

Hickey will be taking on a much bigger machine that is frankly not in the
mood for backing down.

What will happen?
Given the state of government finances it’s difficult to see how HMRC will back
down from a measure which boosts, however modestly, government coffers. But they
will have to listen to him.

Hickey comes with a pedigree that cannot be ignored. He has been CEO at the
Charity Finance Directors Group since 2006 but before that was FD at national
charity Help the Aged. He is an ICAEW member and is on the advisory boards for
course both CASS and the London Business School. Hickey knows finance and will
not be afraid of using his background and knowledge to hammer home his argument.

And he is not afraid of grappling with difficult issues. Though his agenda
will be packed, he has taken time to set up a working committee looking at
expenses of senior managers and trustees. If there was ever a nettle to grasp,
it’s that one. Parliament, of course, has been punished for the MPs’ expenses
scandal.

Charity directors are not unfamiliar with controversy around expenses. And
the sensitivities are much the same given that charity funding comes from grants
and donations.

It’s a tricky issue to negotiate and Hickey will be wanting to make a good
job of it ­ probably better than Parliament. Anything less would invite
hostility. Hickey has certainly given himself some challenging times ahead.