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Tax Group prepares for 'best chance' campaign on irrecoverable VAT

Tax Group prepares for 'best chance' campaign on irrecoverable VAT
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Tax Group prepares for 'best chance' campaign on irrecoverable VAT

Finance | Gareth Jones | 24 Aug 2009

Charity Tax Group is drawing up a campaign action plan for its submission to the European Commission consultation on the taxation of public bodies, in a bid to change the law which prevents service delivery charities reclaiming VAT.

The consultation on the Principle VAT Directive takes in taxation of charities that deliver public services and goes to the heart of the issue of irrecoverable VAT, which costs the UK voluntary sector £500m each year.

CTG is already part of a Europe-wide VAT network called EccVAT but Helen Donoghue (pictured), director of CTG, said it was currently trying to expand this group in order to create a louder and more powerful voice to respond to the consultation.

In January, CTG delivered a speech to around 100 Spanish funds and associations and met several tax and legal experts, with whom it is now planning to cooperate over the forthcoming consultation.

“There’s a meeting in September with the existing group, EccVAT, but we are trying to expand that enormously, to create a much wider network of tax experts,” said Donoghue.

She admitted the demands might not be simple to agree, because the UK has to be careful to retain all the concessions it’s already negotiated. “If we lost those our VAT bill would go from £400m to over £1bn,” she said. “So we have to try to protect these while also trying to get more at a European level.”

CTG is currently producing a campaign action plan which will outline how all the different groups from member states will work together on the consultation, which is expected to officially launch late this year or early next.

The Directive was written in 1977 and while the wording was modernised two or three years ago, the structure has never really changed.

“This is big stuff,” said Donoghue. “This is the first time in the last 20 years that we are in a position where people at a very senior level are focusing on the things that really matter to us.”

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