CFDG gives its support to VAT partial exemption proposals

30th September 2008

The Charity Finance Directors' Group (CFDG) are calling for HMRC to give charities greater confidence in administering the rules around VAT partial exemption. They have welcomed the proposals in HMRC's VAT partial exemption consultation, and its spirit of simpler and more flexible regulation. However, they have urged HMRC to be clearer on what they mean by the 'fair and reasonable' basis upon which they will judge charities' calculation of their tax.

CFDG CEO Keith Hickey says, "We welcome this consultation and many of the proposed simplifications. However, we would urge HMRC to consider the balance between consistency and rigidity in the application of these ideas and to heed our call for many of the proposed changes to be optional. We believe that an optional approach will provide the desired simplification without the blanket approach that could harm some charities.

"We look forward to working with HMRC to take these proposals forward, and to fleshing out the detail of the proposed changes."

CFDG have found that some of the proposals in the consultation may result in an easement of the tax burden for charities, by reducing the number of separate VAT calculations they have to make and allowing them to base their recovery rate on past performance. The proposal of combining the partial exemption and business/ non-business calculations was met with particular interest. It was felt as an additional option it should increase the flexibility around partial exemption, although it should, if introduced, dovetail with changes in the de minimis limits suggested elsewhere in the consultation.

- Ends -
Notes to Editor:

1. The Charity Finance Directors' Group was set up in 1987 and is an umbrella group that specialises in helping charities to manage their finance-related functions.

2. CFDG's 1,450 plus members are responsible for the finances of charities with a wide variety of income levels. Between them our members manage some £13.7 billion in charity income per year.

3. For further information on this conference please contact our Policy Team.

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