Sue Ryder has launched its own campaign to battle red tape on VAT announcing that it will lose £1m in irrecoverable VAT following the increase to 20 per cent beginning today.

“Limited Companies, local authorities and some parts of the NHS can reclaim VAT, yet Sue Ryder’s six charitable hospices, seven care centres and ten homecare services are left to swallow this burden. In this tough economic climate the rise of VAT will hit charities like Sue Ryder even harder,” said Sue Ryder CEO Paul Woodward, implying that the red tape is inconsistent with the government’s Big Society agenda.

“We have heard a lot about the Big Society and support the idea of charities delivering more high quality, innovative and cost-effective public services,” he said, “However this is only possible if we are afforded the same benefits the NHS and local authorities are given relating to VAT.”

The campaign will first call for charities taking on health services transferred to them by the NHS or Primary Care Trusts to be afforded the same benefits as the NHS. Longer term it aims to work with the Charity Tax Group and the government to find a solution to the problems associated with the VAT increase which will see the sector suffer a loss of a further £140m in irrecoverable VAT.

In July charity exemption to the VAT increase was rejected in parliament by legislation to allow academy schools to recover VAT incurred on purchases supporting non-business activities mooted in December raised hopes for other charities to do the same. The government has pledged to improve tax policy making in its 2011 Finance Bill which is open for consultation until 9 February.