VAT Ruling a Boost for Charities 
Added : 25th July 2008
Steve Taylor at Cooper Parry says "this is a new boost for charities."
A recent court case has shown that HMRC have been wrong to deny charities the ability to improve their cash flow when refurbishing a building.
Steve Taylor, VAT Senior Manager at Regional Business Advisers, Cooper Parry says “A few years ago it was established that organisations such as charities that undertook major building projects were able to recover VAT in full at the outset and then pay back VAT over a number of years to account for the so called non business use of the building. This has been referred to as the Lennartz principle.”
HMRC have made several attempts to block this with the latest one saying that this could only apply when a new asset was created from the construction works.
The court disagreed which means that charities should now be reviewing their own position to determine if this mechanism that could be withdrawn by the EC at some stage in the future can benefit them.
Steve adds “Also any organisation that had previously attempted to recover VAT in full which had been disallowed by HMRC need to consider lodging a claim based on this ruling.”
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