TaxPersonal TaxRevenue rejects charity tax bid

Revenue rejects charity tax bid

Charities lose about £400m a year in irrecoverable VAT, yet the government does not want to hear about restructuring the system.

The government has effectively closed the door on its charity tax review by warning that it does not want to hear fresh ideas about how to restructure the system. Speaking at a seminar in London last week, Judith Warner of the Customs & Excise charities branch, said the issue of irrecoverable VAT was one of the main reasons for its March consultation document being published a year late.

Charities estimate they lose around £400m a year in irrecoverable VAT.

The consultation document was billed as giving charities a chance to have their say in how their tax treatment should be revamped.

But charity finance directors and advisers believe the government is paying scant attention to the sector’s needs.

Kate Sayer, head of the charity unit at Sayer Vincent, said: ‘Charities are frustrated that we have waited so long for the review and the government has not taken up any of the big suggestions put forward by the sector, which would have made the tax system a lot simpler.’

Sayer added that comments made by Customs and Inland Revenue officials had sparked concern among charities that the government was heading off on its own agenda and veering away from charities’ hopes for the review.

Brenda Campbell from the Inland Revenue capital and savings division, said: ‘We do not want to re-open matters that we feel the consultation document has closed.

‘We are seeking views on the proposals that we have set out. If there are views relating to those proposals which we think we’ve missed, then by all means, bring those to our attention.’

The government wants to have a clear view of what charities expect from the review by the end of August.

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