The Treasury confirmed it would refund the tax from the re-recording of the Band Aid single after much badgering from Bob Geldof. The Band Aid Trust expects the tax relief to save it up to £4m.
But Roy Maugham, tax partner at UHY Hacker Young, has argued all charities should be exempt from VAT.
Maugham said: ‘If it can be done for Band Aid, then why not for the hundreds of other charities in the UK that struggle with VAT bills?
‘If all registered charities were excluded from VAT it would be a massive boost – as charities would benefit, more people would be helped and administrative costs would be slashed.’
The Charity Finance Directors Group has been lobbying Gordon Brown for years in a bid to allow charities to recover VAT, which costs the charity sector around £400m a year.
In 1984, when the first Band Aid single was released, Geldof famously publicly harangued then prime minister Margaret Thatcher to refund the tax. At first she refused, but later succumbed, reimbursing the monies.
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