The Charity Tax Group is urging the government to improve the VAT system for charities in its Autumn Statement, and is calling on the extension of VAT rebate schemes for emergency services and hospices.
In its Autumn Statement submission, published today, the CTG called for the government to address outstanding technical and practical difficulties charities currently face with the system.
It calls on the government to address the “glaring anomaly between the VAT treatment of Government-funded organisations and volunteer organisations providing search and rescue services”.
The CTG is also calling on the government to publicly acknowledge that there are no EU legal obstacles to national VAT refund schemes applying to charities.
In June 2010, CTG estimated that charities were losing over £1bn a year in irrecoverable VAT, a figure which it estimates to have risen by as much as £143m as a result of the VAT increase in January 2011.
CTG chairman, John Hemming (pictured), said: “At a recent meeting with Priti Patel, the minister responsible for charity taxation, I welcomed her commitment to listen to the sector’s concerns and to take action to improve the tax system for charities.
“I urge Treasury ministers to accept the proposals made in our submission; they will save charities time, money and stress. Simple changes, such as the removal of the gift aid history requirement for the small donations scheme, could really help to increase take-up, by making access to the scheme far easier, and should be given serious consideration. The limited VAT refunds for emergency service charities could – literally – save lives.”
The CTG is also calling for a reform of the gift aid declaration and the role of intermediaries, building on work being done by HMRC’s gift aid working group, as well as a reform of the gift aid donor benefits rules, including approved guidance, and the introduction of equivalent gift aid donor benefit rules for payroll giving.
It is also calling for an early review of the gift aid small donations scheme and a more measured approach to tackling abuse of charity tax reliefs, with HMRC encouraged to make the most of existing legislative safeguards.
In March, George Osborne announced in the Budget that the government will refund the VAT costs on fuel for air ambulance charities, following a review by HMRC.
Nicky Morgan, the then economic secretary to the Treasury, said in April that the government is “looking very seriously at the issue” of rebates to cover VAT paid by search and rescue charities and hospices.
