Defence minister Tobias Ellwood has called for a military charity’s campaign to be VAT exempt after learning that sales of commemorative silhouettes were subject to the tax.
Military charity There But Not There is selling silhouettes of World War One soldiers around the country to mark the 100th anniversary of the war’s end.
The charity hopes to raise £15m and will split this between six charities, and expects to have to pay around £3m in VAT.
General the Lord Dannatt, patron of the campaign, has written to the government calling on it to either offer a tax rebate or make a substantive donation that honours a pledge to support military charities with Libor fines levied on the banks.
According to the charity, Ellwood expressed support for Dannatt’s proposal in an open message to chancellor Philip Hammond.
Ellwood wrote: “I hope you agree, given the optics of this and the good causes supported, that there is a strong case for VAT to be exempted.”
Nia Griffith, Labour’s shadow defence secretary, has also supported the proposal.
She said: “I would also urge the government to do the right thing and to consider very carefully whether they should be keeping the money raised from the sale of the Tommies.”
In his letter, Dannatt also called for more Libor funding to be distributed to armed forces charities.
Dannatt quoted a figure from a news story by The Sun earlier this year which claimed that £326m of Libor money intended for charities had been “used to top up central government funds”.
Some £200m of this was assigned to the Department for Education for the creation of 50,000 new apprenticeships however it is unclear where the £326m figure comes from.
Dannatt said: “It is extraordinary that this Libor money has been used to fund projects that really should have been paid for from budgeted Departmental funds.
“It is my understanding that Libor fine money was never intended to top-up government departments and other budgets but support military veterans and charities.”
Johnny Mercer, Conservative MP and defence select committee member, is quoted as saying: “We know not all the money pledged to military charities from Libor made its way to those that needed it most. Questions still need to be answered.
“It would go some way to help temper the mood of military charities however, if the Treasury supported this campaign - as it has with others - and pledged to match-fund money raised or at the very least donate the amount paid in VAT.”
A government spokesperson said: “The Remembered - There But Not There campaign has been a wonderful and very poignant way of commemorating the end of the First World War, and the chancellor has said he will look into this issue.
“Through the Libor scheme, which has now ended, we have committed almost £800m to charities – including military charities – since 2012, including those working with the armed forces and emergency services.”