High Court ruling quashes Oxfam bid to reclaim VAT

Charity will not appeal

Oxfam will not appeal against a court ruling that it cannot claim back VAT worth £3m.

Last last year, the High Court rejected the charity's claim that it should be able to backdate a change to the method used to calculate how much VAT it was owed after the Children's Society won a case relating to VAT on payments to fundraisers in 2005.

The Children's Society case meant charities were able to start including VAT on payments to fundraisers in the total amount used to calculate how much VAT they could reclaim.

Oxfam said this decision, which increased the amount of VAT it could reclaim, should have been applied retrospectively to 1997.

But HM Revenue & Customs refused to accept Oxfam's reasoning and has won a High Court judgement reinforcing an earlier decision by the VAT tribunal that it did not have to make further repayments to the charity.

An Oxfam spokeswoman said last week that the charity would not appeal against the ruling.

If the case had gone in Oxfam's favour, it could have been worth tens of millions of pounds to other charities.

Robert Warne, a partner in the VAT group at specialist charity accountancy firm Horwath Clark Whitehill, said the judgement was not surprising because all HMRC had to show was that the repayment method it had agreed with Oxfam was fair and reasonable.

"This judgement shows that charities don't have a binding contract with HMRC about the method of calculating how much VAT it has to repay," he said. "If you want, you can revisit your method of repayment each year - if you think it needs to be changed, you can renegotiate."

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