TaxCorporate TaxMPs back charities in VAT exemption call.

MPs back charities in VAT exemption call.

Current charity legislation is anti-competitive because local authorities, which many organisations in the sector compete with, are exempt from VAT.

Link:http://www.accountancyage.com/News/1132454

Irrecoverable VAT is estimated to cost the charity sector more than £400m a year. Charities are calling for the removal of the huge financial burden, together with exemption from national insurance rises to allow them to operate on a level playing field.

‘A lot of the competition charities face, especially in the services and care sector, compete with local authorities who are not affected by VAT at all,’ said Les Jones, director of finance at the World Wildlife Fund and vice chairman of the charity finance directors group. We think it’s anti-competitive as it stands.’

Liberal Democrat MP Bob Russell has persuaded more than 100 MPs to back a campaign to enable charities to receive compensation for the VAT they cannot recover.

Russell tabled an early day motion in January, which has been signed by 109 MPs so far. He described VAT and the impending rises in National Insurance, which will cost the sector a further #50m, as a ‘crippling financial burden on charities’.

‘Irrecoverable VAT has a massive impact on the ability of charities to achieve their objectives and help to deliver essential services,’ states Russell’s early day motion.

Whether or not to remove the burden on charities has been a perennial debate for successive chancellors. But John Whiting, a tax partner at PricewaterhouseCoopers, said he doubted the pressure would end in success.

‘I don’t think it will get very far,’ he said.

He said the idea had been ’round the houses’ before and that rather than give any blanket concessions, the government would usually pick off little bits for special attention. ‘I’d lay good odds on there being some charitable offer in the Budget,’ he said.

Related Articles

HMRC large business tax enquiry duration rises to 3 years

Corporate Tax HMRC large business tax enquiry duration rises to 3 years

2d Emma Smith, Managing Editor
SMEs paying higher rate of corporation tax than big businesses

Corporate Tax SMEs paying higher rate of corporation tax than big businesses

1w Alia Shoaib, Reporter
Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

Corporate Tax Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

3m Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

3m Emma Rawson, ATT Technical Officer
EU divided over radical tax reforms targeting tech giants

Corporate Tax EU divided over radical tax reforms targeting tech giants

4m Alia Shoaib, Reporter
‘Improve rather than lose’ disincorporation relief, tax body urges

Administration ‘Improve rather than lose’ disincorporation relief, tax body urges

4m Austin Clark, Reporter
How to educate your clients about tax avoidance

Corporate Tax How to educate your clients about tax avoidance

4m Clear Books | Sponsored
CGT clampdown nets HMRC £124m – but could lead to increase in use of avoidance schemes

Corporate Tax CGT clampdown nets HMRC £124m – but could lead to increase in use of avoidance schemes

4m Austin Clark, Reporter