Charities are granted a number of VAT exemptions and zero
ratings, including zero rating on the construction of new buildings to be used
for charitable purposes. Many charities that provide accommodation to
vulnerable groups rely on this to make their projects economically viable. But
the rules are complicated and open to interpretation. This has caused problems
for Caritas Anchor House – a homelessness charity working in one of the country’s
most deprived boroughs, Newham, London. This charity is in the process of
trying to build “move on” flats for homeless people to transition back into
independent living, a service that helps turn around lives and creates
considerable savings for the public in the long term. Unfortunately, a decision
by HMRC to charge VAT on the full cost of the development, has increased the
bill by £1m. Read more on the Guardian website.
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