The complexities of VAT around charity work gets a hard illustration from a million pound bill handed to Caritas Anchor House. This is in connection with its construction of ‘move on’ flats, for previously homeless residents.
The charity says the unexpected cost is down to the new premises being reviewed by HM Revenue and Customs as a ‘residential and life skills centre’ rather than a ‘homeless hostel’.
“We seem to have been penalised for positively and accurately describing our work, having previously been given advice that our VAT liability for the development would be £250,000.”
Note: expert VAT advice is essential on large charity developments or contracts, but sadly not a guarantee.