Customs backs down on property VAT levy

Charities can recover VAT paid on property and construction costs immediately rather than later, under a mechanism introduced by HM Revenue & Customs (HMRC) last week.

Although European law already allowed charities to use this recovery method, HMRC guidance had previously insisted that not-for-profit organisations pay a lump sum of VAT up front and recover payments later, effectively tying up vast sums of cash.

"The HMRC has backed down and said that people can use this recovery method as the norm, rather than the exception," said a spokeswoman for accountants PKF (UK) LLP.

"This will free a lot of capital for charities because now they won't pay any VAT up front - they will only pay it in dribs and drabs whenever they use the property for personal use."

However, PKF is pressing for the April 2003 cut-off point for back payments to be extended because many charities will lose out.

Meanwhile, the Treasury is to donate £2m to the Disasters Emergency Committee to match VAT collected on fundraising events and sales in support of the tsunami appeal. The Chancellor pledged to do this in January.

- See Finance extra, page 5.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Already registered?
Sign in

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus
Follow us on:
  • Facebook
  • LinkedIn
  • Twitter
  • Google +

Latest Jobs

RSS Feed

Third Sector Insight

Sponsored webcasts, surveys and expert reports from Third Sector partners


Expert Hub

Insurance advice from Markel

Cyber and data security - how prepared is your charity?

With a 35 per cent rise in instances of data breaches in Q2 and Q3 last year, charities must take cyber security seriously

Third Sector Logo

Get our bulletins. Read more articles. Join a growing community of Third Sector professionals

Register now