Charities should brace themselves for a fight over VAT exemptions now the UK has triggered Article 50 as the UK Government will no longer be forced to follow Brussels which currently sets VAT policy across all of its member states.
That is the warning issued by Charity Tax Group technical adviser Graham Elliott, who said that charities could be mistaken in their hope that Brexit will allow for a reduction in the rate of VAT they pay.
Speaking at the CTG’s annual tax conference in London, Elliott cited the Financial Secretary to the Treasury Jane Ellison, who confirmed that VAT policy was “likely to be quite a big issue in the negotiations” about the UK’s exit from the EU.
Elliott said: “It’s obvious that there will be aspects to do with VAT and our rules post-Brexit that will have to be governed by certain aspects of some agreement with the European Union countries. It is clear that we will have very, very slow, glacial change in any VAT issue.”
He added that there was a risk that any reforms introduced by the UK Government could weaken charities’ VAT position, and said the sector should be prepared to defend its existing exemptions.
Elliot said: “EU law has defended certain types of circumstance because it was too difficult for the Government to attack them. After a clean Brexit, you need to think about what you should have been defending all this time if you want to defend certain status quos that might gradually disappear.”
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