Charities set to profit from VAT decision

Charities are calculating potentially large tax rebates after the announcement by HM Revenue & Customs last week that a proportion of VAT costs on investment management fees can be reclaimed by the sector.

The Nuffield Foundation, which successfully appealed for the change of policy, is now negotiating with HMRC on the proportion of VAT it can claim back (Third Sector, 6 February).

The amount charities can reclaim will depend on the level of their VAT-registered business activities that are subsidised by income from investment.

James Brooke-Turner, finance director at the foundation, said his organisation had been subsidising two publishing arms. "It's a very important relief for us," he said.

According to the NCVO and Guidestar UK, investment management costs the sector £86m a year.

Heather Lamont, head of charity business development at HSBC Investments, said: "We're looking at ways to help our clients identify any potential retrospective claims."

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