TaxAdministrationCharities chase Customs over VAT bill

Charities chase Customs over VAT bill

A major clash is looming between charities and Customs & Excise over VAT payments, which will climax in a High Court battle at the end of this month.

Link: Great North run also facing VAT pinch

Ten of the country’s leading charities will challenge Customs on 27 April in the courts over VAT on fees paid to companies that canvas for donations on the streets – so-called ‘charity muggers’.

In a separate development, charities have poured scorn on Customs for the way it has charged VAT on registration fees paid by charity runners in events, such as the London Marathon or the Great North Run to be staged in September.

Charities have long complained about the VAT treatment of fundraisers, but the two complaints look destined to raise the public profile of the issue to new heights.

The VAT treatment of charity muggers will be challenged by the Children’s Society, along with the support of nine others, including Amnesty International.

In the charity runners’ issue, fundraiser Breakthrough Breast Cancer is demanding urgent clarification from Customs after receiving a retrospective VAT bill of £45,000 and £15,000 annually.

Philip Fisher, a tax partner at Chantrey Vellacott, accused Customs of spreading ‘disinformation’ about VAT. He said Customs’ approach ‘seemed morally wrong’ because charities needed every penny earned.

A spokesman for Customs denied the legislation was misleading or that it was deliberately targeting charities ‘We have always gone after money that is due. It is our duty to do that. There is no clampdown,’ he said.

Both charity issues arise under section 4 of the VAT Act 1994. A new guidance note is due in May.

Customs said: ‘We consulted widely and listened to charities to make sure the guidance note met their needs.’

– For more, see www.hmce.gov.uk.

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