Acevo and Charity Tax Group increase pressure over VAT rebate

MPs join campaign to put service-delivering charities on same footing as public sector bodies and academy schools

Ralph Michell, head of policy at Acevo
Ralph Michell, head of policy at Acevo

Charity umbrella bodies have stepped up their lobbying of the government to persuade it to refund VAT to charities that provide public services.

Both Acevo and the Charity Tax Group said they had increased the pressure on the government to put charities on a level playing field with public sector bodies providing services, which are spared VAT.

The decision follows an announcement that the government would spend £275m exempting academy schools from VAT.

Ralph Michell, head of policy at Acevo, said the chief executives body was working with the Charity Tax Group on the issue, and that Treasury ministers appeared "more receptive than in the past" to a change in the rules.

"VAT is a barrier to the government’s policy of transferring more services to the sector, and also to its plans to spin out public bodies into the third sector," he said. "We will push this over the next few weeks."

A VAT rebate for public service provision has received support from Aidan Burley, Conservative MP for Cannock Chase, who last week submitted a question to George Osborne, the Chancellor of the Exchequer, asking "whether he has plans to bring forward legislative proposals to provide charities delivering public services the same VAT status as local authorities and the NHS".

In addition, Labour and Liberal Democrat MPs have signed two early day motions supporting the rebating of VAT to charities. And Labour peers also called on the government to change its policy in a House of Lords debate, with Lord Eatwell accusing Conservative ministers of "negativism and complacency" in their attitude towards charities.

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