Important VAT Consultation

  |  Published: Dec 3rd 2013

The EU has launched a “Review of VAT treatment of public bodies and exemptions in the public interest”, which contains 4 options with significant implications for village halls and other charities as well as public authorities, including Parish Councils. The importance for village halls/community buildings is:

  • danger of loss of 0% VAT on construction of new halls, which would cost from £40K to £200K per project (Option 1 – full taxation).
  • danger of loss of ability for Parish Councils to reclaim VAT under S33, on gifts of work or equipment made in lieu of grant aid, and exemptions. (Option 1).
  • Introduction of a VAT refund system, similar to that for Parish Councils (Option 2). This could potentially enable refunds on extension and alteration work to village halls and other supplies.

The cost of VAT has been one of the biggest, most intractable problems affecting halls. A VAT refund system could save a huge amount of the time and effort for volunteers, and millions wasted in fundraising and grant funding required to pay VAT.

The consultation can be found here. Alternatively if your hall has paid unreclaimable VAT in recent years, benefited from 0% VAT, or could be threatened by withdrawal of 0% VAT, on construction of a new hall, or has benefited from your parish council reclaiming VAT on work or equipment provided for the hall please let us know, explaining the amount and the effect on your community and we will forward to ACRE to include in their response to the consultation.

The closing date is 14th February 2014 and it is recommended that local authorities and MP’s are asked to urge the Treasury to strongly support Option 2 and reject Option 1.

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